RIPPLE, Circuit Judge.
Christine Hines originally brought this action in Massachusetts state court against the State Room, Inc., where she formerly was employed.
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 managers
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;
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 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
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. 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.
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
Ms. Hines earned $77,000 a year in her role, second in the department only to the director of sales; Ms. O'Connor earned $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 week
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).
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 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. Apteker
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
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.
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.
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 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).
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 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 test
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, 80 S.Ct. 453, 4 L.Ed.2d 393 (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:
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
The parties' real dispute in this case concerns the third 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:
Id. § 541.202.
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 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
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 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 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
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 judgment.
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.
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).
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.
