Filed: Aug. 31, 2020
Latest Update: Aug. 31, 2020
Summary: RECOMMENDED FOR PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b) File Name: 20a0286p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT DAVINA HURT and DOMINIC HILL, individually and on + behalf of all others similarly situated, ¦ Plaintiffs-Appellees, ¦ ¦ > No. 18-4058 v. ¦ ¦ ¦ COMMERCE ENERGY, INC., doing business as Just ¦ Energy doing business as Commerce Energy of Ohio, ¦ Inc.; JUST ENERGY MARKETING CORP.; JUST ENERGY ¦ GROUP, INC., ¦ Defendants-Appellants. ¦ + Appeal from the Unit
Summary: RECOMMENDED FOR PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b) File Name: 20a0286p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT DAVINA HURT and DOMINIC HILL, individually and on + behalf of all others similarly situated, ¦ Plaintiffs-Appellees, ¦ ¦ > No. 18-4058 v. ¦ ¦ ¦ COMMERCE ENERGY, INC., doing business as Just ¦ Energy doing business as Commerce Energy of Ohio, ¦ Inc.; JUST ENERGY MARKETING CORP.; JUST ENERGY ¦ GROUP, INC., ¦ Defendants-Appellants. ¦ + Appeal from the Unite..
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RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 20a0286p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
DAVINA HURT and DOMINIC HILL, individually and on ┐
behalf of all others similarly situated, │
Plaintiffs-Appellees, │
│
> No. 18-4058
v. │
│
│
COMMERCE ENERGY, INC., doing business as Just │
Energy doing business as Commerce Energy of Ohio, │
Inc.; JUST ENERGY MARKETING CORP.; JUST ENERGY │
GROUP, INC., │
Defendants-Appellants. │
┘
Appeal from the United States District Court
for the Northern District of Ohio at Cleveland.
No. 1:12-cv-00758—James S. Gwin, District Judge.
Argued: October 24, 2019
Decided and Filed: August 31, 2020
Before: CLAY, STRANCH, MURPHY, Circuit Judges.
_________________
COUNSEL
ARGUED: Shannon K. Patton, LITTLER MENDELSON, P.C., Cleveland, Ohio, for
Appellants. Nicole T. Fiorelli, DWORKEN & BERNSTEIN CO., L.P.A., Painesville, Ohio, for
Appellees. ON BRIEF: Shannon K. Patton, Robert M. Wolff, Edward H. Chyun, Alex R.
Frondorf, LITTLER MENDELSON, P.C., Cleveland, Ohio, Bradley A. Sherman, SHERMAN
BOSEMAN LEGAL GROUP, LLC, Cleveland, Ohio, for Appellants. Nicole T. Fiorelli, Patrick
J. Perotti, Frank A. Bartela, DWORKEN & BERNSTEIN CO., L.P.A., Painesville, Ohio, for
Appellees.
STRANCH, J., delivered the opinion of the court in which CLAY, J., joined. MURPHY,
J. (pp. 19–37), delivered a separate dissenting opinion.
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 2
_________________
OPINION
_________________
JANE B. STRANCH, Circuit Judge. The Fair Labor Standards Act provides minimum
wage and overtime protections to a broad range of employees. Davina Hurt and Dominic Hill
brought claims for themselves and others alleging that their positions are covered by the
protections of the FLSA and parallel provisions of Ohio law. They challenge their designation
by Defendants as “outside salesman,” a category that is “exempt” from the FLSA, which means
that their position is not covered by the protections of the Act. A trial was held and the jury
found that Plaintiffs were not exempt outside salespeople. Just Energy appeals that
determination and challenges pre- and post-trial rulings made by the district court, certain
instructions given to the jury, and evidentiary rulings made by the court. For the reasons
explained below, we AFFIRM.
I. BACKGROUND
A. Factual Background
Plaintiffs worked for a group of affiliated energy supply companies that provide electric
power and natural gas to residential and commercial customers in the United States and
internationally, collectively referred to as Just Energy. Just Energy operates in the U.S. through
licensed subsidiaries and is the parent company of a number of businesses, including Defendants
Commerce Energy, Inc. and Just Energy Marketing Corp. Commerce Energy, Inc. is the
licensed subsidiary in Ohio, California, Georgia, Maryland, Massachusetts, New Jersey, and
Pennsylvania, and Just Energy Marketing Corp. hired Plaintiffs to go door-to-door to solicit
customers on behalf of Commerce Energy.
Plaintiffs worked as door-to-door solicitors and spent most of their working hours in the
field seeking to convince customers to buy electricity and natural gas products. Just Energy paid
them exclusively on a commission basis without paying overtime or minimum wage, and the
actual hours and pay for each worker varied. Plaintiffs were not required to have any sales
experience or level of education; they were required only to go through an orientation and a sales
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 3
training course. Plaintiffs also signed Just Energy’s independent contractor agreements (the
“Agreement”) that set out confidentiality, non-disparagement, non-exclusive, and non-compete
clauses.
Plaintiffs were typically required to attend daily morning meetings at Just Energy’s
facility before going into the field. They were driven to the field in teams led by Just Energy
supervisors; any work breaks were controlled by those supervisors. The Agreement states that
there are no minimum number of hours or minimum number of contracts that must be solicited.
Some Plaintiffs testified they were required to work on specific days and hours, and would be
reprimanded if they did not work as specified. Plaintiffs could not choose where they worked;
they were directed to certain neighborhoods by the supervisors and given maps with highlighted
streets showing where they were required to work for the day.
When in the field, Plaintiffs were mandated to adhere to a dress code, including wearing
a shirt that properly and prominently displays the company’s name and logo, and were subject to
rules set out in a contractor compliance matrix, which lists the feedback potential customers
might give about their interactions with the workers and the disciplinary consequences for such
feedback. For their solicitation, Plaintiffs were instructed to follow a script verbatim. When a
potential customer became interested in Just Energy’s products, Plaintiffs filled out a “customer
agreement” and obtained the customer’s signature. Some Plaintiffs referred to this as an
“application”; it was non-binding and did not finalize the transaction.
Plaintiffs were directed to place a verification call from the customer’s premises for a
third party to confirm that the customer entered into the agreement voluntarily and with full
understanding of its terms. Plaintiffs had to initiate the call to the third-party verifier using the
customer’s telephone and were required to leave the premises before the customer spoke to the
verifier. Plaintiffs were not allowed to return or speak to the customer after the call. This was an
important requisite of the job: the compliance matrix reserves the most severe consequence of
termination for a solicitor who remains present at the consumer’s premise during the verification
call, uses his or her cell phone to conduct the call, or returns to the customer’s premises within
seven days after the call. The Ohio Public Utilities Commission (PUCO) requires procedures for
door-to-door energy solicitors, including independent third-party verification for 50% of
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 4
customers, but the universal verification process for Just Energy’s customers was required as part
of a 2010 settlement agreement between the company and PUCO.
The sale was not final after the third-party verification call. Instead, the customers went
through a credit check, and after that, Just Energy could approve the application and finalize the
sale or choose to reject the application. The signed customer agreement specifies that the
contract is conditional upon Just Energy’s acceptance, at its sole discretion. Just Energy had
“unfettered discretion to reject any energy contract submitted” by Plaintiffs. Some applications
were rejected for failed credit checks, but Plaintiffs frequently were not told why
applications were rejected and their commissions not paid. Plaintiffs had no role in Just
Energy’s decision-making, and because their contact with the customer ended after they had to
leave the premises, they were not allowed to engage in customer service or address any customer
concerns—customers were instructed to call a separate customer service line with any questions.
Trial testimony indicates that Just Energy exercised its discretion to reject applications
frequently. Though a satisfactory third-party verification call and a successful credit check were
essential, ultimately approval depended on the exercise of discretion by Just Energy and was
required before an application generated by Plaintiffs became final and they could receive and
retain their commission.
Plaintiffs submitted documentary evidence of compensation for members of the class.
Exhibits in the record include two spreadsheets that summarize the total compensation of
Plaintiffs who worked varying lengths of time between 2010 and 2014. Of the 3,840 total
individuals with compensation data available in the spreadsheets, 214 made no money at all.
69% of the individuals made under $1,000 in total compensation and 62% of the individuals
made under $500.
Individual plaintiffs testified to their earnings. One made only $1,200 over three or four
months, while another made only $196 while working 12- to 14-hour days, six to seven days a
week for about two months. Other plaintiffs earned nothing—one never received a commission
even after working six to seven days a week for at least a month and turning in three to five
signed customer agreements to Just Energy every day, and another earned nothing even after
working long days for two weeks, knocking on over 100 doors each day. Yet another worked
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 5
11-hour days, six days a week for a month, and testified that he “only made enough really to pay
for the uniform” and that he “didn’t even get any check stubs or anything” from Just Energy.
B. Procedural History
Plaintiffs filed a complaint in 2012 alleging that Just Energy misclassified its
door-to-door solicitors as outside salespeople in order to qualify for an exemption from the Fair
Labor Standards Act (FLSA) and the Ohio Minimum Fair Wage Standards Act (OMFWSA).
Plaintiffs sought to certify the FLSA claim as a collective action and the OMFWSA claim as a
class action. In 2013, the district court granted conditional certification of the FLSA collective
action to workers who performed services in the last three years for Commerce Energy, Just
Energy’s licensed subsidiary operating in Ohio; it granted class certification for the OMFWSA
claim to Ohio workers who performed services for Commerce Energy since March 2009. The
court denied Just Energy’s summary judgment motion, and in September 2014, the case went to
a bifurcated jury trial on the question of Just Energy’s liability.
Prior to trial, Just Energy filed a motion in limine to exclude evidence of Plaintiff’s
compensation; the district court denied the motion and admitted compensation evidence over Just
Energy’s objection. At trial, over Just Energy’s objection, the district court instructed the jury on
the law governing the outside sales exemption to the wage and hour requirements of the FLSA.
The court asked the jury “to consider the extent to which the employee has the authority to bind
the company to the transaction at issue” and whether “the employer retains and/or exercises
discretion to accept or reject any transactions for reasons that are unrelated to regulatory
requirements applicable to the industry.”
The jury found Just Energy liable for minimum wage and overtime pay under the FLSA
and the OMFWSA on the basis that Plaintiffs were not exempt outside salespeople. The district
court denied Just Energy’s motions for directed verdict and judgment as a matter of law. Just
Energy now challenges the denial of summary judgment, directed verdict, and judgment as a
matter of law, as well as the jury instructions and the admission of compensation evidence at
trial. Just Energy contends that Plaintiffs were exempt from the FLSA and the OMFWSA under
the outside sales exemption as a matter of law.
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 6
II. ANALYSIS
A. Standard of Review for Summary Judgment and Trial Motions
Appeals of summary judgment denials after a full trial on the merits are generally
precluded, though the Supreme Court has acknowledged a possible exception for “‘purely legal’
issues capable of resolution ‘with reference only to undisputed facts.’” Ortiz v. Jordan, 562 U.S.
180, 188–190 (2011). To determine whether Plaintiffs were outside salespeople, we need to
consider not just the statute and regulations, but also facts such as the details of Plaintiffs’
door-to-door soliciting activities and the process of making and finalizing sales.
The dissent bases its review on the premise that the facts here are “largely undisputed”
and from that conclusion argues that whether Plaintiffs were outside salespeople is a purely legal
question for the district court and not the jury. It is true that how workers spend their working
time is a question of fact, and “whether their particular activities exclude[] them from [FLSA
protections] is a question of law.” Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 714
(1986). Whether such a mixed question of law and fact is treated as a legal question or a factual
question depends “on whether answering it entails primarily legal or factual work.” U.S. Bank
Nat’l Ass’n v. Vill. at Lakeridge, LLC,
138 S. Ct. 960, 967 (2018).
At the summary judgment stage there existed a number of disputed issues of material fact
about the relationship between Plaintiffs and Defendants, including the level of supervision and
independence Plaintiffs had in the field, the particular requirements on work hours, breaks,
assignments, and solicitation locations, and the sales completion procedures of Defendants.
Determining whether Plaintiffs were exempt requires findings on these relevant disputed facts
and is therefore a question properly before the jury. See, e.g., McDermott Int’l, Inc. v. Wilander,
498 U.S. 337, 356 (1991); Lilley v. BTM Corp.,
958 F.2d 746, 750 n.1 (6th Cir. 1992). The
question presented is not a purely legal issue capable of resolution with reference only to
undisputed facts as noted in Ortiz. Review on appeal of the district court’s denial of summary
judgment is not appropriate.
We review de novo the denial of Just Energy’s motions for judgment as a matter of law
and directed verdict based on the outside sales exemption. Finn v. Warren County, 768 F.3d
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 7
441, 450 (6th Cir. 2014). “The motion may be granted only if in viewing the evidence in the
light most favorable to the non-moving party, there is no genuine issue of material fact for the
jury, and reasonable minds could come to but one conclusion, in favor of the moving party.”
Loesel v. City of Frankenmuth, 692 F.3d 452, 461 (6th Cir. 2012) (quoting Radvansky v. City of
Olmsted Falls,
496 F.3d 609, 614 (6th Cir. 2007)).
B. Outside Sales Exemption
Plaintiffs brought minimum wage and overtime claims under the FLSA and overtime
claims only under the OMFWSA. The OMFWSA is a “general law involving the concern of the
state for all of its citzens” that requires “major employers in Ohio, public and private,” to pay
minimum wages and overtime pay for certain types of employees. Wray v. City of Urbana,
440 N.E.2d 1382, 1383 (Ohio Ct. App. 1982). For the purposes of this appeal, we need only
analyze the FLSA claims because the OMFWSA incorporates the FLSA’s exemptions. Ohio
Rev. Code § 4111.03. The Ohio law “parallels the FLSA,” and courts therefore “approach the
issues raised on appeal in a unitary fashion.” Douglas v. Argo-Tech Corp.,
113 F.3d 67, 69 n.2
(6th Cir. 1997).
The FLSA contains an exemption from its overtime and minimum wage protections for
workers “employed . . . in the capacity of outside salesman.” 29 U.S.C. § 213(a)(1). To show
that workers are exempt from FLSA protections, “the employer bears not only the burden of
proof, but also the burden on each element of the claimed exemption.” Martin v. Indiana
Michigan Power Co., 381 F.3d 574, 578 (6th Cir. 2004) (citing
Douglas, 113 F.3d at 70).
Our review of the applicability of this FLSA exemption is governed by the statutory
language, Department of Labor (DOL) regulations, caselaw, and particular facts of the case. The
Supreme Court has provided guidance on how courts are to evaluate this exemption: “the
statute’s emphasis on the ‘capacity’ of the employee counsels in favor of a functional, rather than
a formal, inquiry, one that views an employee’s responsibilities in the context of the particular
industry in which the employee works.” Christopher v. SmithKline Beecham Corp., 567 U.S.
142, 161 (2012). Thus, we look to the nature of the industry as well as the particulars of the
workplace in which the employees perform their services.
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 8
The statute employs but does not specifically define the term “outside salesman” (or
salesperson), but courts look to how the term has been “defined and delimited from time to time
by regulations of the [Department of Labor].” 29 U.S.C. § 231(a)(1); see also Christopher,
567 U.S. at 147. The DOL has issued three regulations relevant to the “outside sales”
exemption, 29 C.F.R. § 541.500, 29 C.F.R. § 541.501, and 29 C.F.R. § 541.503. Section
541.500 defines an outside salesperson as someone “customarily and regularly engaged away
from the employer’s place or places of businesses,” whose primary duty is either 1) “making
sales” or 2) “obtaining orders or contracts for services.” Section 541.501 further clarifies the
definition of “making sales” and “obtaining orders or contracts for services,” and Section
541.503 distinguishes exempt promotional work of outside salespeople from non-exempt
promotional work incidental to sales made by someone else.
In Christopher, the Supreme Court summarized the statute and DOL regulations:
“[A]n outside salesman is any employee whose primary duty is making any sale, exchange,
contract to sell, consignment for sale, shipment for sale, or other disposition.” 567 U.S. at 148.
The definition of “sale” is broad, and the list of transactions defining a “sale” in the regulations
represents “an attempt to accommodate industry-by-industry variations in methods of selling
commodities.”
Id. at 163–64. The Court considered guidance on the scope of the exemption in
DOL reports and the preamble to the latest regulations, cautioning that exempt status should not
depend on technicalities, such as “whether it is the sales employee or the customer who types the
order into a computer system and hits the return button” or whether the order is filled by a jobber
rather than directly by the employer.
Id. at 149.
1. Making Sales
We begin with whether Plaintiffs’ duties constitute “making sales” as defined by
29 C.F.R. § 541.500. The procedures for solicitation that Plaintiffs were required to follow
started with offering an application or customer agreement for Just Energy’s services and then
assisting potential customers to complete the form. A signed agreement did not finalize the
transaction for Just Energy products, but Plaintiffs were mandated to cease all involvement in the
process after the application was prepared and the verification call was initiated. Plaintiffs had to
leave the customer’s premises at the beginning of the call or face the possibility of termination.
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 9
From the other side, each customer had to successfully complete the verification call and pass a
credit check. Even then, Just Energy retained, and frequently exercised, ultimate discretion on
whether to finalize or refuse the application.
At trial, the jury found that Just Energy did not satisfy its burden to demonstrate that
Plaintiffs were outside salespeople and found Defendants liable for violating the FLSA and the
OMFWSA. The district court denied their motions for directed verdict and judgment as a matter
of law, finding that there was sufficient evidence to support the jury’s determination that the
outside sales exemption did not apply to Plaintiffs.
Just Energy argues that because Christopher’s detailers were considered outside
salespeople when they obtained “non-binding commitments” from physicians to prescribe their
drugs, 576 U.S. at 147, “authority to bind” should not be a component of the test for “making
sales.” But the Court found that the pharmaceutical detailers in Christopher were exempt from
the FLSA because:
[o]btaining a nonbinding commitment from a physician to prescribe one of
respondent’s drugs is the most that [the detailers] were able to do to ensure the
eventual disposition of the products that respondent sells. This kind of
arrangement, in the unique regulatory environment within which pharmaceutical
companies must operate, comfortably [fits under the exemption].
Id. at 165 (footnote omitted and emphasis added). Christopher addressed the specific parameters
of work in the unique regulatory environment of the pharmaceutical industry. Its conclusion that
pharmaceutical detailers who cannot obtain binding commitments are “making sales” does not
necessarily apply to other industries.
We, and other circuits, have recognized the unique factual setting and the limitations of
Christopher in resolving outside sales exemption claims in other industries. In Killion v. KeHE
Distributors, LLC, we explained the path followed by the Court through the “unique regulatory
environment” governing pharmaceutical companies and found Christopher to be of “limited
import.” 761 F.3d 574, 583–84 (6th Cir. 2014). We reversed summary judgment that had
applied the exemption to sales representatives of a food distributor because, though the plaintiffs
entered orders from individual stores, the account managers controlled the volume and placed
restrictions on the orders allowed.
Id. at 584. Similarly, the Fifth Circuit in Meza v. Intelligent
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 10
Mexican Mktg., Inc. noted that Christopher “offers little guidance as to how a court determines if
a driver is a deliveryman or a salesman for FLSA purposes” because it dealt with pharmaceutical
sales representatives.
720 F.3d 577, 586 (5th Cir. 2013).
The unique regulatory environment of the pharmaceutical industry makes evident why
Christopher’s holding does not readily transfer to other industries. Both drug companies and
their detailers are prohibited from selling prescription drugs directly to patients: the ultimate
discretion to complete a sale rests elsewhere—with a prescribing physician. Christopher, 567
U.S. at 150 & n.4. No such regulatory environment prevents direct energy sales. Just Energy
sales had requirements of its own making, such as third-party verifications for all potential
customers based on its individual settlement agreement with Ohio PUCO, but no regulations
prohibited direct sales or required Just Energy itself to retain full discretion to finalize a sale.
Plaintiffs’ lack of authority to finalize the transactions is significant when reviewing the facts
under a “functional, rather than formal, inquiry . . . in the context of the particular industry in
which the employee works.”
Id. at 161.
The fact that Just Energy retained discretion to finalize the sale is not merely a
technicality immaterial to the analysis. Id. at 149. Plaintiffs’ customer agreements, sometimes
referred to as “applications,” were rejected frequently by Just Energy, and Plaintiffs often were
not told the reason for the rejection, though it directly impacted if and how much they were paid.
Once the verification phone call began, these Ohio Plaintiffs had no ability to personally
follow-up, answer questions and assuage concerns, or confirm the transaction with the customer.
No regulatory environment prohibited the solicitors from controlling and completing the sale
directly to customers. The dissent analogizes the nonbinding agreements here to the nonbinding
sales of products that are subject to supply availabilities and customer return policies, or bulk
orders that must be completed by purchasing retailers. Even assuming that the salespeople in
these situations qualify for the exemption under the FLSA, they are distinguishable from
Plaintiffs here because Just Energy itself, not the purchasers as part of a regulation or policy,
controls the finalization of sales. Plaintiffs could not finalize customer agreements and complete
sales due to Just Energy’s choice to retain ultimate discretion and to require certain solicitation
procedures at its Ohio workplace.
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 11
In Killion, we reversed summary judgment in favor of the distributor because a jury could
conclude that the plaintiffs did not actually make sales. 761 F.3d at 584–85. Similarly, Plaintiffs
here communicated with potential customers, convinced them to try Just Energy products, and
inputted their information onto the agreement. But Just Energy retained discretion over
completion of sales, just as the account managers in Killion could restrict and control the volume
of orders. It was appropriate for the jury and now this court to consider Just Energy’s retention
of discretion over completion of sales as a factor in determining whether Plaintiffs were making
sales.
Our conclusion is supported by Clements v. Serco, Inc., where the Tenth Circuit held that
mere soliciting or inducing applications is not making sales, especially if the employer retains
discretion and implements other requirements to complete the transaction. 530 F.3d 1224, 1229
(10th Cir. 2008) Though the Clements court noted that the “touchstone for making a sale . . . is
obtaining a commitment,”
id. at 1227, it found that civilian military recruiters are not outside
salespeople because they “could only lay the groundwork. It was the Army—and only the
Army—who could enlist a recruit,”
id. at 1229. Plaintiffs’ jobs are comparable to those of the
civilian recruiters in Clements because they “could only lay the groundwork” but not complete
the sale.
Finally, Just Energy argues that this case should be controlled by Flood v. Just Energy
Marketing Corp., in which the Second Circuit considered FLSA and state law claims by
door-to-door solicitors against the same parent entity, Just Energy, and affirmed summary
judgment in favor of Just Energy. 904 F.3d 219 (2d Cir. 2018). Just Energy argues that here too
“making sales” must focus on “whether the employee has obtained a commitment to buy the
employer’s product.”
Id. at 232. But Flood’s emphasis on the commitment to buy is grounded
in its factual setting, and, as Christopher establishes, other factors must also be considered.1
1Appellants also cite as supplemental authority two Department of Labor opinion letters finding the outside
sales exemption applicable to two specific factual scenarios. The DOL there applied an analysis that is consistent
with our discussion of Christopher and other precedent above, which governed our analysis in the factual setting of
this case.
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 12
Based on Flood, our dissenting colleague concludes that our decision is wrong because
these cases present an all or nothing proposition: either all employees of the topmost parent
corporation, Just Energy, receive FLSA protection or none should. But that ignores the
fact-intensive inquiry required by and the employee-protective purpose of the FLSA and the
OMFWSA. It also ignores the distinct parties in the cases: here, Commerce Energy of Ohio,
Inc.; in Flood, Just Energy New York Corp. It is true that both cases share defendants—the
same ultimate parent corporation, Just Energy, sits atop the complex structure of subsidiaries—
so there will be some overlap in method or procedures. But how the New York subsidiary
chooses to operate its worksite does not tell us how the Ohio subsidiary must necessarily operate
its worksite. And a suit brought in Ohio against the Ohio subsidiary may find its workplace
operation to be covered by FLSA protections without creating a circuit split, even if the
workplace operation of the New York subsidiary is exempt. A comparison of these two cases
shows that no circuit split exists.
Flood involved a separate group of licensed Just Energy subsidiaries that operated in
New York at a worksite that functioned very differently from Plaintiffs’ worksite. There, if a
solicitor convinced a potential buyer to fill out the customer agreement, the third-party
verification call was initiated and the solicitor waited outside the customer’s immediate presence.
Id. at 225. If the verifier provided a confirmation number to the customer, the solicitor
reengaged with the customer at this “critical point of the sale,” and added the number to the
agreement.
Id. The solicitor was told “to confirm the program details” and “ensure that the
customer has no further questions.”
Id. The solicitor then “close[d] the sale by giving the
customer all the paperwork.”
Id. He was “the last person to sell a customer,” and no one else
made sales after him.
Id.
Here, the evidence at trial shows that the procedures governing the interaction between
the door-to-door solicitors and the customers were significantly different at the Ohio workplace.
The Ohio affiliate of Just Energy did not allow Plaintiffs to “close the sale,” or provide
confirmation and answers to customer questions or concerns at the “critical point of the sale.”
Plaintiffs’ contact with the customers ended upon initiating the verification call, on pain of
termination. Customers were instructed to direct any questions or concerns to Just Energy’s
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 13
customer service. Wage issues, which the minimum wages requirements of the FLSA seek to
address, also highlight the distinctions between the workplaces. The lead plaintiff in Flood
earned more than $70,000 in commissions per year, was eligible to earn residual payments, and
received incentive awards for travel around the world.
Flood, 904 F.3d at 226. In contrast,
testimony revealed that one Ohio plaintiff made only $1,200 over three or four months, while
another made only $196 while working 12- to 14-hour days, six to seven days a week for about
two months. And others testified to making nothing at all, even after working 11- to 12- hour
days, six to seven days a week for several weeks. Of the 3,840 total individuals with
compensation data available in the trial spreadsheets, 69% of the individuals made under $1,000
in total compensation and 62% of the individuals made under $500. In sum, Plaintiffs had
significantly less control over their work, sale methods, and compensation than the New York
solicitors. Flood is distinct both in its procedural posture and in the factual setting that
controlled whether solicitors were in fact authorized or allowed to make sales. Flood does not
control the outcome of this case.
This appeal challenges the determination of the jury following trial that Defendants are
liable to Plaintiffs under the FLSA. Based on the evidence before it, the jury found that
Plaintiffs were not “making sales” and were not exempt outside salespeople. This decision
accords with the language of the FLSA and the regulations of the DOL. Our precedent and that
of our sister circuits also support this conclusion. Viewing the entire record in the light most
favorable to Plaintiffs, as we must, we cannot say that reasonable minds could have come to only
one conclusion—a decision in favor of Defendants that Plaintiffs were “making sales.”
Therefore, the district court properly denied Just Energy’s motions for judgment as a matter of
law and for directed verdict.
2. Obtaining Orders or Contracts for Services
Having determined that Plaintiffs were not “making sales,” we turn to whether Plaintiffs
were “obtaining orders or contracts for services.” 29 C.F.R. § 541.500. Just Energy argues on
appeal that we should find Plaintiffs to be outside salespeople as a matter of law because they
were obtaining orders or contracts for services. At issue is whether Just Energy’s business was
selling services. The Agreement between Just Energy and Plaintiffs clearly states that Just
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 14
Energy “is engaged in the business of selling (or soliciting the sale of) consumer products
(natural gas and electricity),” and testimony from Just Energy representatives confirms that gas
and electricity are “commodities.” We have also held that electricity is a commodity. Williams
v. Duke Energy Int’l, Inc., 681 F.3d 788, 800 (6th Cir. 2012) (holding that electricity is a
commodity for the purposes of the Robinson-Patman Act, which prohibits price discrimination
between different purchasers of commodities for those engaged in commerce). The electricity
and natural gas that Just Energy sells to customers are commodities. Plaintiffs were not
“obtaining orders or contracts for services.”
3. External Indicia and Apparent Purpose of the FLSA Exemption
We turn next to the external indicia of salespeople and the apparent purpose of the FLSA
exemption. Just Energy argues that these are not appropriate considerations or are at best a
secondary analysis of the outside sales exemption. As already explained, we review Defendants’
motions for judgment as a matter of law and for directed verdict de novo, applying “the same
deferential standard as the district court: ‘The motion may be granted only if in viewing the
evidence in the light most favorable to the non-moving party, there is no genuine issue of
material fact for the jury, and reasonable minds could come to but one conclusion, in favor of the
moving party.’” Radvansky, 496 F.3d at 614 (quoting Gray v. Toshiba Am. Consumer Prods.,
Inc.,
263 F.3d 595, 598 (6th Cir. 2001)).
In analyzing the outside sales exemption, the Supreme Court has considered the “external
indicia of salesmen,” which include: whether the workers were hired for their sales experience,
whether they were trained to obtain the maximum commitment possible, whether they worked
away from the office with minimal supervision, and whether they were rewarded with incentive
compensation. Christopher, 567 U.S. at 165–66. Even though the Court considered these
indicia as part of its conclusion that pharmaceutical detailers conducted more atypical sales work
(qualifying as “other disposition” under the definition of “sale” in the statute, 29 U.S.C.
§ 203(k)), it did not limit the indicia analysis to exempt salespeople who fall under the catchall
sales category of “other disposition.” See
id. at 164–66. We apply these indicia to the practices
and procedures of Plaintiffs’ Ohio workplace.
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 15
Plaintiffs were not hired for their sales experience—no experience was required. They
were required to report to the office each day before going to work in the field, where they were
closely supervised. The supervisors controlled Plaintiffs’ daily schedules, including selecting the
streets on which they were to work. Just Energy mandated that workers follow a detailed script
in their presentations to potential buyers and enforced a compliance matrix that governed
discipline and employment itself. The script instructed Plaintiffs to get customers to commit to
Just Energy products, but unlike the detailers in Christopher, they were not instructed to
“obtain[] the maximum commitment possible.” Id. In the Ohio workplace, Plaintiffs had to end
their engagement with the customer and leave the premises after initiating the verification call.
They were unable to verify the commitment from the customers, address customer concerns or
questions, or provide assurances to the customers. It is true that Plaintiffs were paid exclusively
on commission, but unlike the New York solicitors in Flood, their commission income was
minimal and they were not rewarded with additional benefits such as incentives to travel around
the world. See
Flood, 904 F.3d at 226. The totality of the circumstances in this Ohio workplace
did not evidence the external indicia of salesmen that would support application of the
exemption.
In determining whether the workers were “employed . . . in the capacity of outside
salesman,” 29 U.S.C. § 213(a)(1), the Supreme Court also considered whether a plaintiff’s
capacity “comports with the apparent purpose of the FLSA’s exemption for outside salesmen.”
Christopher, 567 U.S. at 166. The Court explained that “[t]he exemption is premised on the
belief that exempt employees ‘typically earned salaries well above the minimum wage’ and
enjoyed other benefits that ‘se[t] them apart from the nonexempt workers entitled to overtime
pay.’ Preamble 22124.”
Id. The pharmaceutical detailers there earned an average of more than
$70,000 per year, including both a base salary and incentive pay, which was “well above the
minimum wage”; they were “not required to punch a clock or report their hours, and they were
subject to only minimal supervision.”
Id. at 151, 166. The pharmaceutical detailers also
performed work that “was difficult to standardize to any time frame and could not be easily
spread to other workers after 40 hours in a week.”
Id. at 166.
The Court concluded that
pharmaceutical detailers are “hardly the kind of employees that the FLSA was intended to
protect.”
Id.
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 16
Plaintiffs’ jobs do not fit this mold of independent workers managing their hours,
territory, and income. Trial evidence showed they received no base pay and apparently made
much less than minimum wage—a stark contrast to the lead plaintiff in Flood who earned more
than $70,000 in commissions per year along with other benefits. See Flood, 904 F.3d at 226.
Plaintiffs’ pay was entirely dependent on completed sales, over which they had no control, and
trial testimony and compensation data in the record showed that wages were both inconsistent
and disproportionately low when compared to hours worked. Plaintiffs did not benefit from
minimal supervision—their location and schedules were set and controlled by their supervisors
and their selling procedures were dictated by the compulsory script and closely monitored via the
compliance matrix. Plaintiffs’ jobs did not comport with the apparent purpose of the outside
sales exemption.
C. Jury Instructions
Just Energy challenges the legal accuracy of the jury instructions, arguing that “authority
to bind” should not be a consideration when applying the outside sales exemption. Erroneous
jury instructions are generally reviewed for abuse of discretion, but we review the “legal
accuracy” of jury instructions de novo. United States v. Blanchard, 618 F.3d 562, 571 (6th Cir.
2010).
On appeal, we “review jury instructions as a whole in order to determine whether they
adequately inform the jury of relevant considerations and provide a basis in law for aiding the
jury to reach its decision.” United States v. Godofsky, 943 F.3d 1011, 1027–28 (6th Cir. 2019)
(quoting United States v. Theunick,
651 F.3d 578, 589 (6th Cir. 2011)). “Reversal of a jury
verdict based on incorrect jury instructions is warranted only when the instructions, ‘viewed as a
whole, [are] “confusing, misleading, and prejudicial.”’” Bridgeport Music, Inc. v. UMG
Recordings, Inc.,
585 F.3d 267, 274 (6th Cir. 2009) (quoting Romanski v. Detroit Entm’t, LLC,
428 F.3d 629, 641 (6th Cir. 2005)). The district court instructed the jury:
In determining whether a particular transaction qualifies as a sale for purposes of
the Fair Labor Standards Act, you are required to consider the extent to which the
employee has the authority to bind the company to the transaction at issue.
However, when governmental regulatory requirements limit an employee’s ability
to bind his employer, compliance with those governmental regulatory
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 17
requirements do not disqualify the transaction from constituting a sale for the
purposes of the outside salesperson exemption.
...
On the other hand, if the employer retains and/or exercises discretion to accept or
reject any transactions for reasons that are unrelated to regulatory requirements
applicable to the industry, the transaction should not be considered a sale for
purposes of the Fair Labor Standards Act.
(R. 850, Trial Tr., PageID 15486-87)
The district court emphasized consideration of the extent of Plaintiffs’ authority to bind,
rather than instructing that the authority to bind is a prerequisite or determining factor. The court
also clarified the importance of the relevant regulatory requirements applicable to the industry: if
such requirements apply, Plaintiffs’ authority to bind and Just Energy’s discretion to accept or
reject transactions will not disqualify the exemption. In this context, we disagree with our
dissenting colleague’s conclusion that this question should have been resolved solely on the
undisputed fact that Just Energy retained discretion. Instead, it required the jury to evaluate
“case-specific factual issues” in the context of the regulatory environment. U.S. Bank, 138 S. Ct.
at 967. Read as a whole, the jury instructions are an accurate statement of the outside sales
exemption as instructed by Christopher. The district court did not commit reversible error in its
jury instructions.
D. Evidence of Compensation
Just Energy challenges the admission of Plaintiffs’ compensation into evidence, arguing
that compensation is irrelevant to the outside sales exemption and unnecessary here because it
had already stipulated to the fact that it did not pay minimum wage and overtime. Evidentiary
rulings by the district court are reviewed for abuse of discretion. United States v. Jamieson,
427 F.3d 394, 409 (6th Cir. 2005).
In discussing its decision to admit compensation evidence, the district court noted that
Plaintiffs have the burden to show that there is a failure to pay minimum wages and overtime
pay. This is because Just Energy stipulated only that “they do not pay overtime for hours worked
over 40 hours per week and do not pay minimum wage in situations where the commissions
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 18
earned during a particular workweek are insufficient to ensure that salespersons’ wage rates meet
or exceed the minimum wage.” (R. 763, Stipulation & Order, PageID 11094) Just Energy did
not stipulate that Plaintiffs actually earned less than minimum wage in commissions, or that they
were entitled to overtime pay at all. Compensation information was therefore necessary for
Plaintiffs to establish that they had minimum wage and overtime claims to begin with. Indeed,
testimonial evidence showed that a number of plaintiffs worked long hours and received little or
no pay. And as already noted, documentary evidence of over 3,800 individuals showed that 69%
made under $1,000 in total compensation and 62% made under $500.
Compensation information was also relevant to other parts of the outside sales exemption
analysis. Both the Christopher and Flood courts noted the yearly earnings of the plaintiffs; in
Christopher, the Supreme Court referenced compensation information as part of the analysis of
whether the plaintiffs fit the “apparent purpose of the FLSA exemption.” Christopher, 567 U.S.
at 166; see also
Flood, 904 F.3d at 226. Plaintiffs’ compensation evidence, including the size of
the checks that individuals received, was also relevant to determine if and how commissions
were paid, and by extension the amount of discretion that Just Energy exercised to accept or
reject sales. The district court did not abuse its discretion by admitting compensation evidence
as part of the analysis of the outside sales exemption.
III. CONCLUSION
For the reasons stated above, we find no error in the challenged jury instructions and
evidentiary rulings of the district court and AFFIRM the district court’s denial of the motions
for judgment as a matter of law and directed verdict.
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 19
_________________
DISSENT
_________________
MURPHY, Circuit Judge, dissenting. We must decide whether the plaintiffs are outside
salespeople exempt from the requirements of the Fair Labor Standards Act (FLSA). The basic
facts are largely undisputed: The plaintiffs go door-to-door convincing residents to buy natural
gas or electricity from Just Energy. When a plaintiff convinces residents to do so, the residents
sign “customer agreements” stating that they are choosing Just Energy for their energy. Given
these facts, how would you describe the plaintiffs’ occupation? Most people, I think, would
naturally refer to them as “salespeople” who make door-to-door “sales.” The plaintiff in a
similar suit readily agreed as much. Flood v. Just Energy Mktg. Corp., 904 F.3d 219, 225 (2d
Cir. 2018). Here, however, the district court held that a jury could find that the plaintiffs were
not outside salespeople. That is so, it said, largely because Just Energy could reject customer
agreements after customers signed them.
With respect for my colleagues’ contrary views, I would reverse. The district court erred
twice over. And our failure to correct its errors creates a clear circuit conflict. First, the court
wrongly treated the ultimate issue whether the plaintiffs were outside salespeople as a fact
question for the jury, not a legal question for the court. Yet whether the “particular activities” of
a group of employees “exclude[] them from the overtime benefits of the FLSA is a question of
law[.]” Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 714 (1986); see
Flood, 904 F.3d at
227. This case thus raises a legal question: Do the plaintiffs’ undisputed day-to-day activities
qualify as “making sales” within the meaning of the outside-sales exemption? 29 C.F.R.
§ 541.500(a)(1)(i).
Second, the district court interpreted this “making sales” language too narrowly. Id. The
Supreme Court has given it a broad reach, holding that pharmaceutical sales representatives
“make sales” by getting nonbinding commitments from doctors to prescribe (not buy) drugs.
Christopher v. SmithKline Beecham Corp.,
567 U.S. 142, 161–69 (2012). If those efforts qualify
as “making sales,” the plaintiffs’ efforts to convince customers to purchase their energy from
Just Energy do too. I see no textual basis for the district court’s view that their activities do not
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 20
qualify as “making sales” simply because Just Energy can still back out of an agreement after a
plaintiff convinces a customer to sign it. The Second Circuit rejected the same argument when
concluding that a similar Just Energy employee made sales.
Flood, 904 F.3d at 229–33. So two
circuit courts are now holding the same company to conflicting legal mandates. That state of
affairs is unsustainable. Either all of these Just Energy employees should receive the FLSA’s
protections or none should.
I
A
The FLSA requires employers to pay a minimum wage and overtime compensation.
29 U.S.C. §§ 206–07. But its protections do “not apply with respect to” “any employee
employed . . . in the capacity of outside salesman” as that term is “defined and delimited from
time to time by regulations of the Secretary” of Labor. Id. § 213(a)(1). (No party challenges this
delegation of authority. Cf. Gundy v. United States,
139 S. Ct. 2116 (2019).) A regulation
defines “outside salesman” to cover employees who (1) primarily engage in “making sales” and
(2) typically work away from their employer’s business. 29 C.F.R. § 541.500(a). It provides:
(a) The term “employee employed in the capacity of outside salesman” in
section 13(a)(1) of the Act shall mean any employee:
(1) Whose primary duty is:
(i) making sales within the meaning of section 3(k) of the Act, or
(ii) obtaining orders or contracts for services or for the use of
facilities for which a consideration will be paid by the client or
customer; and
(2) Who is customarily and regularly engaged away from the employer’s
place or places of business in performing such primary duty.
Id. This case concerns the “making sales” element. That element incorporates the statutory
definition of “sale”: “‘Sale’ or ‘sell’ includes any sale, exchange, contract to sell, consignment
for sale, shipment for sale, or other disposition.” 29 U.S.C. § 203(k); 29 C.F.R. § 541.501(b).
In Christopher, the Supreme Court interpreted “making sales” broadly because it uses
this broad statutory definition. 567 U.S. at 162–64. The Court viewed the definition’s list of
covered items as “an attempt to accommodate industry-by-industry variations in methods of
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 21
selling commodities.”
Id. at 164. It thus read “the catchall phrase ‘other disposition’” to reach
“those arrangements that are tantamount, in a particular industry, to a paradigmatic sale of a
commodity.”
Id. Under this definition, the Court found that pharmaceutical sales
representatives make sales by persuading doctors to prescribe drugs.
Id. at 165–67.
It held that a
“nonbinding commitment” to prescribe a drug is an “other disposition.”
Id. at 165. It gave two
additional reasons for this view. First, the representatives bore “external indicia” of salespeople,
including that they were “hired for their sales experience,” “worked away from the office, with
minimal supervision,” and “were rewarded for their efforts with incentive compensation.”
Id. at
165–66. Second, the exemption exists because outside salespeople typically make well over the
minimum wage and work non-standard schedules.
Id. at 166.
These purposes supported the
exemption’s application because pharmaceutical sales representatives are paid well and often
work irregular hours.
Id.
B
This case involves the sale of energy rather than drugs. Just Energy Group and two
subsidiaries, Commerce Energy and Just Energy Marketing, “sell electricity and natural gas to
residential and commercial customers in the United States and Canada.” Hurt v. Commerce
Energy, Inc.,
92 F. Supp. 3d 683, 687 (N.D. Ohio 2015). (I refer to all defendants as “Just
Energy” because their corporate distinctions do not matter here.) As part of Just Energy’s
“selling scheme,” the plaintiffs “would go door to door to obtain applications from potential
customers” to purchase electricity or natural gas.
Id. Just Energy hired the plaintiffs “without
regard to their prior sales experience” and “closely controlled [their] work schedules” by driving
them to neighborhoods and telling them “how many doors to knock on per day.”
Id. at 689–90.
It also gave the plaintiffs “detailed scripts to follow[.]”
Id. at 691. And it paid them only
commissions.
Id.
As their primary duty, the plaintiffs persuaded residents to sign forms entitled “customer
agreements” (what the district court called “applications,”
id. at 687). In an Ohio example of this
form, a customer acknowledges: “I CHOOSE Commerce Energy d/b/a Just Energy to be my
supplier of natural gas (“Gas”) for the Term selected below.” Yet the agreement does not
immediately bind either side of the transaction. It tells customers they have the right to rescind it
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 22
for a significant period of time. It also is “conditional upon [Just Energy’s] acceptance[.]” And
Just Energy’s “acceptance is at [its] sole discretion,” depending in part on whether the customer
is “creditworthy” and whether Just Energy can “verify [the customer’s] information by recorded
phone call[.]” After obtaining an agreement, a plaintiff would initiate this call and leave the
customer’s home so that the customer could speak with a third-party verifier to protect against
fraud. The plaintiffs received a commission only if Just Energy later accepted the agreement.
The plaintiffs sued Just Energy for failing to pay them a minimum wage and overtime
compensation. The district court certified a collective action under the FLSA and a class action
under Ohio law. (The same standards apply to both claims.) The class plaintiffs worked for Just
Energy in six states: Illinois, Ohio, Pennsylvania, Maryland, California, and New York.
At trial, the parties stipulated that the plaintiffs worked away from Just Energy’s
business. The trial thus addressed only whether the plaintiffs were “making sales.” The court
gave lengthy instructions on this element. It read the statutory definition of “sale” and noted that
the jury’s “decision should be [a] functional rather than formal inquiry, one that views an
employee’s responsibilities in the context of the particular industry in which the employee
works.” Tr., R.850, PageID#15486. The court also stated that the jury must “consider the extent
to which the employee has the authority to bind the company to the transaction at issue.” Id. If
an employer could reject a transaction “for reasons that are unrelated to regulatory requirements
applicable to the industry,” the court said, “the transaction should not be considered a sale[.]”
Id., PageID#15486–87. It next turned to Christopher’s “external indicia” of salespeople. It told
the jury that it may “ask whether under the totality of the circumstances [these factors] suggest
the plaintiffs were actually engaged in making sales.”
Id., PageID#15487. It then ticked through
various indicia, including, for example, whether “the employee was recruited based upon sales
experience and ability[.]”
Id., PageID#15488.
The jury ruled for the plaintiffs. It answered “No” to the following question: “Have
Defendants met their burden of demonstrating that Plaintiffs qualify as outside salespeople and
are thus exempt from the legal requirement to pay minimum wage and overtime?” The district
court denied Just Energy’s motion for judgment as a matter of law for two reasons. See
Hurt, 92
F. Supp. 3d at 689–93. It held that the “external indicia” “could easily support the jury’s
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 23
verdict.”
Id. at 689.
And it held that the plaintiffs “obtained only non-binding applications from
customers[.]”
Id. at 692. After a damages phase, the court entered a judgment against Just
Energy for over $4.8 million.
II
The district court committed two errors. It wrongly asked the jury to answer a legal
question. And when doing so, it misinterpreted the phrase “making sales.”
A
The district court did not decide (one way or the other) whether the plaintiffs were
outside salespeople. It instead held that, while the evidence could support a verdict in Just
Energy’s favor, sufficient contrary evidence existed “for the jury to reach the opposite
conclusion[.]” Hurt, 92 F. Supp. 3d at 689, 693. The court wrongly viewed this question as one
of fact rather than law.
1
This case raises a common problem about how to characterize “the application of a legal
standard to settled facts.” Guerrero-Lasprilla v. Barr, 140 S. Ct. 1062, 1068 (2020). That
question arises only after one identifies the relevant “legal standard” and the relevant “facts.”
The correct decisionmakers for those two inquiries are obvious. Courts pick the “legal test” by
deciding what a statute means. U.S. Bank Nat’l Ass’n v. Vill. at Lakeridge, LLC,
138 S. Ct. 960,
965 (2018). And factfinders find the “‘historical’ fact[s]” by deciding “who did what, when or
where, how or why.”
Id. at 966. Once we know the legal test and the historical facts, a
decisionmaker must decide whether those facts satisfy that test—a “mixed question of law and
fact.”
Guerrero-Lasprilla, 140 S. Ct. at 1069 (citation omitted). Do these mixed questions raise
legal issues for courts or fact issues for juries? It depends. U.S.
Bank, 138 S. Ct. at 966–67. If
answering the question “require[s] courts to expound on the law,” courts treat it as legal.
Id. at
967; cf. Ornelas v. United States,
517 U.S. 690, 697 (1996). If answering the question
“immerse[s] courts in case-specific factual issues,” courts treat it as factual. U.S.
Bank, 138
S. Ct. at 967; cf. Monasky v. Taglieri,
140 S. Ct. 719, 730 (2020).
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 24
This analysis leads us to the proper question here: Does deciding whether undisputed job
duties fall within an FLSA exemption “entail[] primarily legal or factual work”? U.S. Bank, 138
S. Ct. at 967. The Supreme Court has told us it is legal.
Icicle, 475 U.S. at 714. Icicle addressed
the exemption for “any employee employed as a seaman[.]” 29 U.S.C. § 213(b)(6). The
plaintiffs, engineers on a seafood-processing barge, worked to ensure the barge’s continuous
operation.
Icicle, 475 U.S. at 711. After a bench trial, the district court found them exempt.
Id.
The Ninth Circuit reversed on de novo review.
Id. at 710. The Supreme Court, in turn, reversed
because the Ninth Circuit wrongly made “factual findings” about the historical facts.
Id. at 714.
It explained that what the employees did from day to day raised a question of fact subject to
clear-error review.
Id. But it then said: “The question whether their particular activities
excluded them from the overtime benefits of the FLSA is a question of law which both parties
concede is governed by the pertinent regulations[.]”
Id. (emphasis added). It added that the
appellate court could have reversed the district court—even assuming that the “factual findings
were unassailable”—if it had found that the “proper rule of law was misapplied to those
findings[.]”
Id.
We have adopted Icicle’s dichotomy since. While we review a district court’s “findings
of fact for clear error,” we “review de novo the district court’s application to those facts of the
legal standards contained in [FLSA] statutes, regulations, and caselaw.” Brock v. City of
Cincinnati,
236 F.3d 793, 800 (6th Cir. 2001); Ale v. Tenn. Valley Auth.,
269 F.3d 680, 691 (6th
Cir. 2001); Martin v. W.E. Monks & Co.,
1993 WL 300332, at *2 (6th Cir. Aug. 3, 1993);
Spencer v. Office of the Auditor of Pub. Accounts,
1991 WL 32361, at *1 (6th Cir. Mar. 12,
1991).
Other courts agree. “The exemption question under the FLSA is a mixed question of law
and fact. The question of how the employees spent their working time is a question of fact. The
question of whether their particular activities excluded them from the overtime benefits of the
FLSA is a question of law.” Pippins v. KPMG, LLP, 759 F.3d 235, 239 (2d Cir. 2014) (citation
omitted); Robinson-Smith v. Gov’t Emps. Ins. Co.,
590 F.3d 886, 891–92 (D.C. Cir. 2010);
Cheatham v. Allstate Ins. Co.,
465 F.3d 578, 584 (5th Cir. 2006); Walton v. Greenbrier Ford,
Inc.,
370 F.3d 446, 450 (4th Cir. 2004); Ackerman v. Coca-Cola Enters., Inc.,
179 F.3d 1260,
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 25
1264 (10th Cir. 1999); Spinden v. GS Roofing Prods. Co.,
94 F.3d 421, 426 (8th Cir. 1996). If
the facts are undisputed, courts regularly grant summary judgment to employers (finding that an
exemption applies),
Pippins, 759 F.3d at 240, 252; Gregory v. First Title of Am., Inc.,
555 F.3d
1300, 1308–10 (11th Cir. 2009), or employees (finding that an exemption does not apply),
Calderon v. GEICO Gen. Ins. Co.,
809 F.3d 111, 120, 130 (4th Cir. 2015); Clements v. Serco,
Inc.,
530 F.3d 1224, 1229 (10th Cir. 2008).
2
Now apply this framework here. We must start by identifying the “legal test.” U.S.
Bank, 138 S. Ct. at 965. As noted, the outside-sales exemption has two parts. 29 C.F.R.
§ 541.500(a). And it is our job to figure out (without the slightest deference to the jury) what the
first part means when it says that employees must have a primary duty of “making sales within
the meaning of section 3(k) of the Act[.]”
Id. § 541.500(a)(1)(i). Did the district court correctly
hold that “making sales” requires employees to have the authority to bind their employer to a
sale? Did it correctly interpret that phrase to depend on the “external indicia” of salespeople?
These are purely legal questions. (I think the district court got them wrong, but set that aside for
now.)
Next consider the “historical facts.” U.S. Bank, 138 S. Ct. at 966. If the parties disputed
any of the activities that the plaintiffs did on a day-to-day basis, that factual dispute would
certainly be for the jury to resolve. Yet I do not see much disagreement on these facts. There is
no dispute that the plaintiffs regularly worked away from Just Energy’s offices. 29 C.F.R.
§ 541.500(a)(2). And there is no dispute about the plaintiffs’ “primary duty”: to persuade
residents to sign forms agreeing to buy their energy from Just Energy.
Id. § 541.500(a)(1).
The parties debate only whether these solicitations rise to the level of “making sales.”
See
id. § 541.500(a)(1)(i). For this question, too, the historical facts are largely undisputed. The
plaintiffs, for example, did not need sales experience and Just Energy closely controlled their
work.
Hurt, 92 F. Supp. 3d at 689–90. Both the customers and Just Energy could later reject
agreements that the plaintiffs convinced customers to sign.
Id. at 692–93. And the plaintiffs
were paid only on a commission basis and only if neither party rejected the agreement.
Id. at
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 26
687. All told, this case strikes me as one in which the “tasks performed by” the employees are
“essentially agreed by the parties” and they instead dispute only whether those tasks “exclude[]
them from the overtime benefits of the FLSA.”
Pippins, 759 F.3d at 240 (quoting
Icicle, 475
U.S. at 714). The case thus raises “a question of law.”
Id. (quoting Icicle, 475 U.S. at 714).
Christopher bolsters my view. That case arose on summary judgment. 567 U.S. at 152.
The Court first clarified the meaning of “making sales,” a legal
question. 567 U.S. at 161–64
(Part II.C.1). It then applied its test to the sales representatives’ duties, a mixed question of law
and fact.
Id. at 165–67 (Part II.C.2). When doing so, the Court did not frame this question as
whether a reasonable jury could find that the representatives were (or were not) “making sales”
under its test. The Court applied the test itself.
Id. Yet if Christopher’s “application of a legal
standard to settled facts” was really for the jury, I find it difficult to see how that case did not at
least raise a triable issue.
Guerrero-Lasprilla, 140 S. Ct. at 1068; see also Encino Motorcars,
LLC v. Navarro,
138 S. Ct. 1134, 1140–43 (2018) (finding employees exempt at pleading stage).
The Second Circuit likewise treated this question as for the court in a nearly identical
case. Flood, 904 F.3d at 228. The plaintiff in Flood worked for two of the same Just Energy
companies in New York. He had largely the same duties as the plaintiffs here, but the district
court found that these duties qualified as “making sales” on summary judgment.
Id. at 224–26.
On appeal, the Second Circuit said: “The question of how an employee spends his or her time
working is one of fact, while the question of whether those work activities exempt him or her
from the FLSA is one of law.”
Id. at 227. It then explained why the plaintiff made sales as a
matter of law.
Id. at 229.
Frankly, I do not see the need for a trial even under the district court’s view of the law.
Its instructions read as if the court was asking the jury to answer a question of statutory
interpretation. The instructions told the jury to consider the text of the “sales” definition and the
purpose-based indicia from Christopher. Yet the instructions then added a legal gloss nowhere
found in Christopher, stating: “[I]f the employer retains and/or exercises discretion to accept
and/or reject any transaction for reasons that are unrelated to regulatory requirements applicable
to the industry, the transaction should not be considered a sale[.]” Tr., R.850, PageID#15487.
There is no dispute that Just Energy retained the discretion that the instructions prohibited. So
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 27
the district court’s view of the law should have led it to enter judgment as a matter of law for the
plaintiffs. Either way, whether the plaintiffs are exempt or non-exempt, this “making sales”
question is for the court.
B
Even if this mixed question of law and fact were for the jury, the proper meaning of the
outside-sales exemption raises a pure legal question for the court. U.S. Bank, 138 S. Ct. at 965.
And no reasonable jury could return a verdict for the plaintiffs under a correct view of the law.
1
Like the Second Circuit, I believe that these Just Energy employees were “undoubtedly
‘making sales’ within the scope of the outside salesman exemption” when they engaged in their
door-to-door solicitations. Flood, 904 F.3d at 229. I reach this conclusion based on the plain
text, the nearby outside-sales regulations, the FLSA as a whole, and the most relevant caselaw.
a. The text’s plain meaning shows that the plaintiffs “made sales.” The phrase “making
sales” has two requirements: there must be a result (a “sale”) and an employee’s activities must
have enough of a connection to that result (the employee must “make” the sale). The Supreme
Court recently rejected the once common view “that exemptions to the FLSA should be
construed narrowly.” Encino, 138 S. Ct. at 1142. So we must interpret these words as we would
any other text—by giving them a “fair reading,” not a restrictive one.
Id.
When fairly read, both words have a broad meaning. Start with “sales.” The regulation
incorporates the statutory definition of “sale.” Far from covering only the technical “exchange
of a commodity for money,” 9 Oxford English Dictionary 49 (1933), this definition “includes
any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other
disposition,” 29 U.S.C. § 203(k). By using the verb “include,” the definition clarifies that its
nonexclusive list does not identify all arrangements that qualify as “sales.” See
Christopher,
567 U.S. at 162. And by using the adjective “any,” the definition clarifies that every kind of the
listed items qualifies as a “sale.” See
id. To have separate meaning, moreover, the catchall
“other disposition” must cover more than “a ‘firm agreement’ or ‘firm commitment’ to buy”
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 28
because those things already fall within the phrase “contract to sell.”
Id. at 163 & n.20 (citation
omitted).
The word “making” next identifies the connection an employee must have to a “sale.” It
has a broad meaning too. In one sense, a person “makes” a sale if the person “cause[s]” the sale
or “brings” it “about.” Webster’s New International Dictionary 1485 (2d ed. 1934) (def. 18); 6
Oxford English Dictionary at 61 (def. 9). In another sense, the entire phrase (“making sales”)
can be read simply as “selling.” When a sentence uses the verb “make” with an object that can
take a verb form (“to make a statement”), the combined phrase can have the same meaning as
that verb form (“to state”). Janus Capital Grp., Inc. v. First Derivative Traders, 564 U.S. 135,
142 (2011) (citing 6 Oxford English Dictionary at 66 (def. 59)). This view does not change
things. While “sell” can have a technical meaning (“[t]o transfer (property) for a
consideration”),
Webster’s, supra, at 2272 (def. 7), that narrow meaning would not fit the
regulation’s broad definition of “sell,” 29 U.S.C. § 203(k). In this setting, “selling” should cover
those who “persuade” customers “to a course of action” (a sale),
Webster’s, supra, at 2272 (def.
14), or who “cause or further” the sale
, id. (def. 8); 9 Oxford English Dictionary at 429 (def. 3.c).
This meaning fits the context. United States v. Hill, 963 F.3d 528, 533 (6th Cir. 2020).
The regulation uses “making sales” to describe those who are “outside salesmen.” Cf. Johnson v.
United States,
559 U.S. 133, 140 (2010). In that context, “making sales” naturally refers to those
who persuade people to buy things. Most people, for example, would say that a “car salesman”
who convinces a customer to buy a car is the one who “makes” the “sale” even if the customer
then reviews the paperwork with the dealership’s financial staff.
Christopher, 567 U.S. at 167.
Turning to this case, the plaintiffs’ duty to persuade customers to buy energy from Just
Energy fits within this plain meaning of “making sales.” Is there a “sale” involved? Yes.
Unlike Christopher, we need not even concern ourselves with the catchall “other disposition.”
See 567 U.S. at 165. The arrangement here falls within a specific item—“contract to sell.” 29
U.S.C. § 203(k). Did the plaintiffs “make” these contracts? Yes, again. I agree that Just Energy
could decline to enter a contract after the plaintiffs convinced a customer to sign an agreement.
But the plaintiffs were the ones who “brought about” any later finalized contracts by
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 29
“persuading” customers to enter them. See
Webster’s, supra, at 1485, 2272. The text requires
nothing more.
In the alternative, the plaintiffs undoubtedly brought about (“made”) the customers’
offers to purchase by convincing them to sign the agreements memorializing those offers. Does
an offer to buy a good qualify as a “sale”? Even if it is not a “contract to sell” because Just
Energy could reject the offer, it fits within the “other disposition” catchall. See Christopher, 567
U.S. at 163–64. An offer to buy is essentially an “order” for goods. See
id. (defining
“disposition”). And the very next provision clarifies that “orders” “for services” are covered. 29
C.F.R. § 541.500(a)(ii). It would make little sense to read § 541.500(a)(ii) as reaching non-
contractual orders for services while reading § 541.500(a)(i) as excluding non-contractual orders
for goods.
b. Nearby outside-sales regulations also show that the plaintiffs were “making sales.”
These regulations distinguish those who make their own solicitations from those who promote
the sales of others. And the plaintiffs were making their “own” solicitations.
The Department of Labor has traditionally distinguished salespeople from “promotion
men” working for manufacturers. U.S. Dep’t of Labor, Wage & Hour Div., Report and
Recommendations of the Presiding Officer at Hearings Preliminary to Redefinition 46 (1940)
(“1940 Report”). These promoters would visit retail stores to “put[] up displays and posters,
remov[e] damaged or spoiled stock from the merchant’s shelves or rearrang[e] the merchandise.”
U.S. Dep’t of Labor, Wage & Hour & Public Contracts Divs., Report and Recommendations on
Proposed Revisions of Regulations, Part 541, 82–83 (1949) (“1949 Report”). The Department
concluded that they were not salespeople because their activities were “designed to stimulate
sales which will be made by someone else[.]” Id. at 83. If, by contrast, an employee was
“actually engaged in activities directed toward the consummation of his own sales, at least to the
extent of obtaining a commitment to buy from the person to whom he is selling,” the employee
was exempt.
Id.
A “promotion work” regulation codified this distinction. It says that the exemption
reaches promotion work performed “in conjunction with an employee’s own outside sales or
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 30
solicitations[.]” 29 C.F.R. § 541.503(a). But the exemption does not reach promotional work
“that is incidental to sales made, or to be made, by someone else[.]”
Id. The regulation gives as
an example of the latter an employee who visits “chain stores” to arrange goods and replenish
stock but “does not obtain a commitment for additional purchases.”
Id. § 541.503(c). These
actions are not “making sales” because the employee “does not consummate the sale nor direct
efforts toward the consummation of a sale[.]”
Id. Another regulation, by comparison, suggests
that a delivery driver makes sales if the driver “obtains or solicits orders for the employer’s
products from persons who have authority to commit the customer for purchases.”
Id.
§ 541.504(c)(2). In the guidance with these regulations, the Department reiterated that “making
sales” should cover employees who “‘obtain a commitment to buy’ from the customer and are
credited with the sale.” 69 Fed. Reg. 22122, 22162 (Apr. 23, 2004) (quoting 1949 Report, at 83).
This dichotomy likewise shows that the plaintiffs “made sales.” They engaged in their
own “solicitations” when they went door-to-door to convince customers to buy energy, obtaining
their own “orders” and “direct[ing] [their] efforts toward the consummation of” their own sales.
29 C.F.R. §§ 541.503(a), (c), 541.504(c)(2). They also sought to “obtain a commitment to buy”
(the customer agreements) and were “credited” with finalized contracts (through their
commissions). 69 Fed. Reg. at 22162. Conversely, the plaintiffs have identified no other Just
Energy employees who “made” these sales. They have not argued that the third-party verifiers
did so. For good reason. Those verifiers existed to stop sales, not make them. They ensured
that the plaintiffs had disclosed all required information and had not engaged in fraud. Cf.
Flood, 904 F.3d at 225.
c. A broader view of the FLSA supports this conclusion too. The outside-sales
exemption relies on “a general definition” of sale “that applies throughout the FLSA.”
Christopher, 567 U.S. at 164 n.21. We should consider how the statute uses the word “sale” or
“sell” elsewhere. After all, courts presume that the same word does not change meanings across
a statute. See Scialabba v. Cuellar de Osorio,
573 U.S. 41, 60 (2014). That principle has even
more force when the word comes with a universal definition. See 29 U.S.C. § 203(k).
So I find it noteworthy that Congress broadened the FLSA’s reach in 1961 to cover
businesses that have “employees handling, selling, or otherwise working on goods or materials
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 31
that have been moved in or produced for commerce by any person[.]” 29 U.S.C.
§ 203(s)(1)(A)(i) (emphasis added); Sec’y of Labor v. Timberline S., LLC, 925 F.3d 838, 843–45
(6th Cir. 2019). How does the Secretary of Labor interpret “selling” in this provision? The
Secretary broadly defines the word to match the plain meaning I have given to “making sales”:
“As long as the employee in any way participates in the sale of the goods he will be considered
to be ‘selling’ the goods, whether he physically handles them or not.” 29 C.F.R. § 779.241.
“Thus, if the employee performs any work that, in a practical sense is an essential part of
consummating the ‘sale’ of the particular goods, he will be considered to be ‘selling’ the goods.”
Id.
Would anyone challenge that the plaintiffs were “selling” under this definition? They
“participate” in obtaining the contracts to sell by discovering one side of those contracts. And
they are an “essential part” of completing the contracts that Just Energy finalizes. Without the
plaintiffs, there would be no purchasers—and hence no contracts. It does not get more essential
than that.
To be sure, the Fifth Circuit fifty years ago rejected reliance on this regulation because it
concerns the FLSA’s coverage, not an exemption. Wirtz v. Keystone Readers Serv., Inc., 418
F.2d 249, 261 (5th Cir. 1969). But Wirtz rests on since-overruled logic. It said: “Given the rule
that coverage provisions are to be liberally construed while exemptions are to be narrowly
construed, definitions for one purpose would seem ill suited to the other.”
Id. (emphases added).
Not anymore. The Supreme Court recently clarified that the FLSA’s exemptions are just as
much a part of Congress’s legislative compromise as are its coverage provisions.
Encino, 138
S. Ct. at 1142. Both are entitled to the same “fair reading,” not to an overly broad or overly
narrow one.
Id.
d. Relevant precedent removes all doubt. As noted, the Second Circuit found that a
similar Just Energy employee fell within the exemption.
Flood, 904 F.3d at 229. It reasoned
that the plaintiff “was not just promoting these products or advertising them; he was trying to
persuade specific customers to sign up then-and-there for an energy plan.”
Id. The court found
that he made sales because he “obtain[ed] a commitment to buy from the customer and [was]
credited with the sale.”
Id. (citation omitted). It also rejected the claim that the plaintiff did not
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 32
make sales because Just Energy could reject an agreement. “We do not agree that the outside
salesman exemption requires a showing that a selling employee has an unconditional authority to
bind the buyer or his employer to complete the sale.”
Id. This case is legally identical to Flood.
Apart from Flood, the reasoning of all nine Justices in Christopher shows that the
plaintiffs made sales. The majority held that a “nonbinding commitment” to prescribe a drug
qualifies as an “other disposition” and so a “sale.” 567 U.S. at 165. A nonbinding agreement to
buy energy looks even more like a “sale” than a nonbinding commitment to prescribe a drug. As
Flood noted, the plaintiffs’ duties are “more in the nature of ‘making sales’ than the primary
duties of the representatives at issue in
Christopher.” 904 F.3d at 231. If those representatives
are exempt, the plaintiffs must be too. In fact, even the Christopher dissent believed that the
exemption covered those who “obtain a firm commitment to buy the
product.” 567 U.S. at 178
(Breyer, J., dissenting). The signed customer agreements strike me as a firm commitment to buy
energy from Just Energy.
2
The district court and the majority reach a contrary result for two reasons: The plaintiffs
could not bind Just Energy to the contracts and they did not bear all the “external indicia” of
salespeople. Neither reason removes the plaintiffs from the outside-sales exemption’s reach.
Authority to Bind. The district court held that the plaintiffs do not “make sales” because
Just Energy and its customers could both stop a deal after a customer signed an agreement. See
Hurt, 92 F. Supp. 3d at 692–93, 696–97. I do not understand why this fact should disqualify the
plaintiffs. Neither text nor precedent supports the district court’s rule.
Start with the text. It does not require the employee to consummate or complete the sale;
it requires the employee to make the sale. And the plaintiffs “make” the “contracts to sell” that
Just Energy enters with consumers even if the contracts do not get finalized until later and even
if some fall apart. The phrase “making sales” naturally captures the employees who “persuade”
customers to buy the employer’s products, Webster’s, supra, at 2272 (def. 14), even if the actual
exchange occurs later in coordination with others,
Christopher, 567 U.S. at 167–68. Nearby
regulations confirm this view. They say employees are covered if they “solicit[] orders” or
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 33
engage in “solicitations.” 29 C.F.R. §§ 541.503(a), 541.504(c)(2). Who else at Just Energy
undertakes these acts of persuasion if not the plaintiffs? The plaintiffs certainly identify no one
else.
Consider some hypotheticals. The exemption covers those who “‘obtain a commitment
to buy’” or an “order.” 69 Fed. Reg. at 22162 (citation omitted); 29 C.F.R. § 541.504(c)(2).
What happens if salespeople are required to say that their employer’s filling of any order
depends on it having available stock (“while supplies last”)? Does that disclaimer disqualify
them from making sales because they do not “bind” their employer to sales? I would think not.
The exemption requires a commitment to buy, not a commitment to sell. The exemption
likewise covers salespeople who convince a retailer to buy a load of product even if the retailer
makes the purchase “through [its] internal computerized purchasing system,” not the salespeople
themselves. 69 Fed. Reg. at 22162. The retailer obviously could change its mind in between
when it gives a commitment to salespeople and when it “types the order into [its] computer
system and hits the return button[.]” Christopher, 567 U.S. at 149 (quoting 69 Fed. Reg. at
22163). Does that discretion disqualify the salespeople from making sales because they do not
get on-the-spot “binding” commitments? Again, I think not. More basically, many retail stores
have generous “return” policies that allow customers to return purchased items no questions
asked. Does a salesperson who convinces a customer to buy a product “make sales” even though
the sale is not “binding” after the customer leaves the store? It would be quite strange to say that
the salesperson is not making sales.
Turn to precedent. Christopher rebuts any argument that employees must have on-the-
spot authority to bind their employers. Flood, 904 F.3d at 229–31. The Court “declined to
interpret the ‘making sales’ requirement to mandate a showing that an employee has fully
consummated a sales transaction or the transfer of title to property.”
Id. at 229. It instead held
that a doctor’s “nonbinding commitment”
sufficed. 567 U.S. at 165 (emphasis added). The sales
representatives likewise did not have the ability to bind their companies to sell prescription drugs
to patients. The patients instead bought the drugs from separate entities—pharmacies. See
id. at
167 & n.24.
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 34
My colleagues say we may disregard Christopher because of the “unique” regulatory
environment for prescription drugs. The plaintiff in Flood made this argument too. I find it no
more persuasive than the Second Circuit did: “Christopher does not . . . suggest that its reasoning
and interpretation of the statute and regulations lack general applicability to other cases[.]”
904 F.3d at 231. And the plaintiffs point to nothing in the “energy industry that should warrant a
more restrictive application of the term ‘making sales[.]’”
Id. They also point to nothing in the
text that draws this regulated-nonregulated line. Either nonbinding commitments count or they
do not.
The majority also suggests that Killion v. KeHE Distributors, LLC, 761 F.3d 574 (6th Cir.
2014), supports its narrow view of Christopher. But Killion did not address whether employees
must have authority to bind employers. It addressed which of two sets of employees made sales.
KeHE, a distributor of food to retailers, treated its “sales representatives” as
exempt. 761 F.3d at
577–78. But the historical facts could be read to suggest that it was the “account managers” who
“determine[d] which products will be sold in the chain stores and who [were] responsible for
growing sales[.]”
Id. at 584. Those facts also could be read to suggest that the sales
representatives merely stocked the shelves of the retailers and ordered new product when the
stores depleted their inventories.
Id. at 578. Under this view of the facts, the representatives
were mere “promoters” facilitating the account managers’ sales. See 1940 Report, at 46;
Killion,
761 F.3d at 585;
Wirtz, 418 F.2d at 261. Here, by contrast, no other employees “really”
persuaded residents to contract with Just Energy. It was the plaintiffs who did so.
My colleagues also compare this case to the Tenth Circuit’s decision in Clements. There,
the court held that a company’s civilian employees who recruited soldiers for the U.S. Army did
not “make sales” as a matter of law. 530 F.3d at 1229. Clements reasoned that the recruiters did
not obtain an “order or contract” to enlist and “merely cultivated ‘a list of persons who seem[ed]
receptive to the idea’ of joining the Army.”
Id. at 1228 (quoting
Wirtz, 418 F.2d at 260). I agree
that Clements relied on the fact that the recruiters lacked the authority to “enlist a recruit” into
the Army—authority reserved to the Army itself.
Id. at 1229. But if Clements relied on the
nonbinding nature of any commitment from recruits, its logic does not survive Christopher’s
holding that a “nonbinding commitment”
counts. 567 U.S. at 165. Notably, Christopher did not
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 35
mention this aspect of Clements when distinguishing it, explaining that the case “concerned
employees who were more analogous to buyers than to sellers.”
Id. at 168. The “more
fundamental reason” recruiters are not salespeople “is that the activity of recruiting employees is
not ‘sales’”; recruiters help the Army buy services.
Clements, 530 F.3d at 1231 (McConnell, J.,
concurring). Clements also relied on the overruled principle that the exemption should be
“narrowly construed.”
Id. at 1227 (majority op.) (citation omitted). Here, the plaintiffs sell
energy and we must give the exemption a fair reading, not a narrow one. See
Encino, 138 S. Ct.
at 1142.
While mistakenly relying on far-afield decisions, the majority fails to distinguish the case
directly on point—Flood. My colleagues agree that Flood found a similar Just Energy employee
covered because he obtained commitments to buy. Maj. Op. 11–12. But they distinguish Flood
because the plaintiff was less controlled and made more money. Id. at 12–13. These differences
do not matter. Under Flood’s test, the plaintiffs are exempt because they obtain commitments to
buy. Indeed, the customer agreements in that case gave Just Energy the same “discretion” to
reject agreements that exists in this one. See Ex. M, Flood v. Just Energy Mktg. Corp., No. 7:15-
cv-02012 (S.D.N.Y. Feb. 8, 2016), ECF No. 66-35. And the outside-sales exemption contains no
salary requirement. “[T]he regulations do not indicate that a court should consider a salesman’s
effective compensation in determining whether the exemption applies.” Meza v. Intelligent
Mexican Mktg., Inc.,
720 F.3d 577, 586 (5th Cir. 2013). From the beginning, the Department of
Labor has recognized that there is no “salary qualification” even though outside salespeople
often can earn little in a week. 1940 Report, at 52. In short, we are creating a clear circuit split.
External Indicia. The district court also held that the plaintiffs do not bear all of the
“external indicia” of salespeople that Christopher used to find pharmaceutical sales
representatives exempt. Hurt, 92 F. Supp. 3d at 690–92. It wrongly relied on these indicia. The
indicia might qualify employees for this exemption even if the employees’ duties fall outside the
ordinary meaning of “sales” work. But they cannot disqualify employees like the plaintiffs who
have duties falling squarely within that ordinary meaning. Both text and precedent again support
my view.
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 36
As for the text, “no such listing of indicia appears in the relevant regulation defining what
it means for an employee to be ‘making sales.’” Flood, 904 F.3d at 233. If an employee is
indisputably “making sales” (say, for example, by going door-to-door to convince residents to
buy a product on the spot), that employee falls within the exemption without more. 29 C.F.R.
§ 541.500(a)(1)(i). It cannot matter that an employee has no sales experience or that the
employer supervises this work. To add such implied conditions on top of the express text would
“disregard” basic “rules of statutory interpretation.” Food Mktg. Inst. v. Argus Leader Media,
139 S. Ct. 2356, 2364 (2019). In my view, the text instead reserves these “indicia” for atypical
sales work. The definition of “sale” contains a vague catchall (“other disposition”) and is non-
exhaustive because it begins with “includes.”
Christopher, 567 U.S. at 162–64. So the definition
can plausibly reach some arrangements that would not ordinarily be understood as “sales.” How
should courts go about deciding whether atypical arrangements qualify as “sales” under the
broad definition? It seems to me the text permits courts to use these external indicia of outside
salespeople to differentiate nontraditional sales that fall within the exemption from those that do
not.
As for precedent, both Christopher and Flood support this distinction. On the one hand,
Flood shows that plaintiffs cannot use the external indicia to disqualify employees who
otherwise fall within the exemption. Flood, 904 F.3d at 233–35. It recognized that the plaintiff
there (like the plaintiffs here) did not satisfy one external indicia of outside sales work—lack of
supervision—because he “had to work prescribed hours,” “was driven to and from pre-selected
locations by company personnel,” “had to abide by a company dress code,” and “had to use a
company sales script.”
Id. at 234. But this supervision did not change the fact that he made sales
under the regulation’s plain text.
Id. And that text did not permit the court “to add a ‘subject to
supervision’ exception to the ‘making sales’ requirement[.]”
Id. at 235. The same logic applies
here.
On the other hand, Christopher shows that the external indicia can be used to cover
transactions that would not otherwise be considered “sales.” An employee’s effort to obtain a
“nonbinding commitment from a physician to prescribe” a drug falls well outside the ordinary
meaning of “sales.” 567 U.S. at 165. So the Court relied on the broad “other disposition”
No. 18-4058 Hurt, et al. v. Commerce Energy, Inc., et al. Page 37
catchall to find that effort covered.
Id. at 164–65. When doing so, it relied on these “external
indicia” to confirm that the pharmaceutical sales representatives were exempt.
Id. at 165–66.
Here, however, there is no need to rely on the external indicia because the plaintiffs’ work falls
squarely within “making sales.” These “indicia” are irrelevant in this case.
For these reasons, I would reverse the district court’s judgment and direct it to enter a
judgment for Just Energy on remand. I thus respectfully dissent.
