-WVG Taylor et al v. Waddell & Reed Inc et al, No. 3:2009cv02909 - Document 137 (S.D. Cal. 2012)
Court Description: ORDER granting Defendant's 91 , 92 Motions for Partial Summary Judgment; denying as moot 97 Motion for Conditional Class Certification. Signed by Judge Anthony J. Battaglia on 01/03/12. (cge)
Download PDF
<![CDATA[
-WVG Taylor et al v. Waddell & Reed Inc et al Doc. 137 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 MICHAEL E. TAYLOR; KENNETH B. YOUNG; individuals, on behalf of themselves individually and on behalf of others similarly situated, 13 Plaintiffs, 14 v. 15 WADDELL & REED, INC., a Delaware Corporation, 16 Defendant. 17 ) ) ) ) ) ) ) ) ) ) ) ) ) Case No.: 09cv2909 AJB (WVG) ORDER GRANTING DEFENDANT’S MOTIONS FOR PARTIAL SUMMARY JUDGMENT AND DENYING AS MOOT PLAINTIFFS’ MOTION FOR CONDITIONAL CLASS CERTIFICATION [Docs. 91, 92, 97] Presently before the Court are the following three motions: 18 19 1. Defendant’s Motion for Partial Summary Judgment as to Plaintiff Michael Taylor (Doc. 91), 20 2. Defendant’s Motion for Partial Summary Judgment as to Plaintiff Kenneth Young (Doc. 92), and 21 3. Plaintiffs’ Motion for Conditional Collective Action Certification, Hoffmann-La Roche Notice, 22 and Equitable Tolling (Doc. 97). 23 For the reasons set forth below, the Court GRANTS both of Defendant’s motions for partial summary 24 judgment and consequently DENIES AS MOOT Plaintiffs’ motion for conditional class certification. 25 I. 26 BACKGROUND 27 28 This matter is a proposed wage and hour collective action brought by former Waddell & Reed (“W&R”) financial advisors (“Advisors”). (FAC ¶ 1.) Named Plaintiffs Kenneth B. Young and Michael 1 09cv2909 Dockets.Justia.com 1 E. Taylor seek to represent a class of Advisors who allege they were classified as independent 2 contractors, when, in fact, they were employees. (Id. at ¶¶ 3, 5.) 3 W&R is in the business of selling financial products, which are distributed through a sales force 4 of Advisors. (Id. at ¶ 2.) When Advisors begin working for W&R, they are required to sign a “Profes- 5 sional Career Agreement” (“PCA”). (Id. at ¶ 37.) This agreement provides the basic terms governing the 6 association with W&R Inc. and Waddell & Reed Affiliates (“W&R Affiliates”). (Id.) Advisors were 7 classified as independent contractors and were paid on a commission only basis. (Id. at ¶ 34, 114.) 8 Advisors did not receive a salary or hourly wage and were not paid overtime. (Id. at ¶¶ 114, 117-118.) 9 With regard to the independent contractor relationship, the PCA specifically states, “Subject to the 10 responsibilities and limitations stated in this Agreement, you shall be free to use W&R office facilities 11 and to exercise your own judgment as to the persons whom you solicit and the time, place, and 12 manner of solicitation.” (See John T. Mullan Decl., Exhibit 5 (emphasis added).) 13 According to Plaintiffs, Advisors should have been classified as employees because, among 14 other things, Advisors could sell only under the name of W&R and could only sell securities authorized 15 by W&R. (Id. at ¶¶ 40-41.) Advisors were assigned clients by W&R and had to surrender all client files, 16 client lists and client data to W&R upon termination of the working relationship. (Id. at ¶ 49.) Advisors 17 were required to work a specified number of hours and generally adhere to a schedule proposed by 18 W&R. (Id. at ¶ 57.) Advisors were encouraged to work at W&R’s offices and had to explain any 19 activities conducted outside the office. (Id. at ¶¶ 60-61.) Advisors were required to attend meetings or 20 face disciplinary action, and were subject to periodic performance reviews by Defendants. (Id. at ¶¶ 68- 21 69.) 22 Plaintiffs filed suit on December 28, 2009, alleging nine claims for violations of the Fair Labor 23 Standards Act (“FLSA”), 29 U.S.C. §§ 206-207; the California Labor Code; and California’s Unfair 24 Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200, et. seq. On April 28, 2010, Plaintiffs filed 25 the FAC. Defendant filed the instant motions for partial summary judgment on April 22, 2011.1 26 27 28 1 In their oppositions to the motions for partial summary judgment, Plaintiffs request that the Court take judicial notice of a number of filed documents pertaining to Lint v. Northwestern Mutual Life Insurance Company, Case No. 09-C-1373 DMS (RBB) (S.D. Cal. 2010). (Docs. 120, 126.) The Court finds that these documents are judicially noticeable under Fed. R. Evid. 201(b) and grants 2 09cv2909 1 Plaintiffs filed the instant motion for conditional class certification on April 27, 2011. The Court held a 2 hearing on the motions on December 15, 2011. 3 II. 4 LEGAL STANDARD 5 “The court shall grant summary judgment if the movant shows that there is no genuine dispute as 6 to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A 7 genuine issue of material fact exists if there is sufficient evidence for a reasonable jury to return a 8 verdict for the non-moving party. Miller v. Glenn Miller Prod., Inc., 454 F.3d 975, 987 (9th Cir. 2006). 9 In order to prevail, a party moving for summary judgment must show the absence of a genuine 10 issue of material fact with respect to an essential element of the nonmoving party’s claim, or to a 11 defense on which the nonmoving party will bear the burden of persuasion at trial. Nissan Fire & 12 Marine Ins. Co. v. Fritz Cos. Inc., 210 F.3d 1099, 1102 (9th Cir. 2000). When the nonmoving party 13 would bear the burden of proof at trial, the moving party may satisfy its burden on summary judgment 14 by simply pointing out to the Court an absence of evidence from the nonmoving party. Miller, 454 F.3d 15 at 987. “The moving party need not disprove the other party’s case.” Id. 16 Once the movant has made that showing, the burden shifts to the opposing party to produce 17 “evidence that is significantly probative or more than ‘merely colorable’ that a genuine issue of material 18 fact exists for trial.” LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1137 (9th Cir. 2009) (citing FTC v. 19 Gill, 265 F.3d 944, 954 (9th Cir. 2001)); see also Miller, 454 F.3d at 988 (“[T]he nonmoving party must 20 come forward with more than ‘the mere existence of a scintilla of evidence.’”) (quoting Anderson v. 21 Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). 22 The Court must review the record as a whole and draw all reasonable inferences in favor of the 23 nonmoving party. Hernandez v. Spacelabs Med. Inc., 343 F.3d 736, 738 (9th Cir. 2000). However, 24 unsupported conjecture or conclusory statements are insufficient to defeat summary judgment. Id.; 25 Surrell v. Cal. Water Serv. Co., 518 F.3d 1097, 1103 (9th Cir. 2008). “Thus, ‘[w]here the record taken 26 as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine 27 28 Plaintiffs’ request. 3 09cv2909 1 issue for trial.’” Miller, 454 F.3d at 988 (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio 2 Corp., 475 U.S. 574, 587 (1986)). 3 III. 4 DISCUSSION 5 Defendant’s motions for partial summary judgment address only the FLSA causes of action 6 alleged by Plaintiffs Taylor and Young. Although Defendant submitted separate motions for Plaintiff 7 Taylor and for Plaintiff Young, the Court addresses the two motions together due to their factual and 8 legal similarities. 9 A. 10 Defendant’s Motions for Partial Summary Judgment Defendant’s position is that as independent contractors (not employees), Taylor and Young do 11 not fall within the FLSA’s scope. However, Defendant argues for purposes of these partial summary 12 judgment motions that even if Taylor and Young could show they were misclassified as independent 13 contractors, their FLSA claims nonetheless fail because they fall under the FLSA’s “outside salesper- 14 son” exemption. In other words, their FLSA claims will fail regardless of whether Taylor and Young are 15 considered independent contractors or employees.2 16 The FLSA specifically exempts an outside salesperson from the statute’s minimum wage and 17 overtime requirements. See 29 U.S.C. § 213(a)(1) (exempting “any employee employed . . . in the 18 capacity of outside salesman . . . .”). The Department of Labor (“DOL”) regulations 19 promulgated under the FLSA define “outside salesman” as any employee: 20 (1) Whose primary duty is: (i) making sales within the meaning of section 21 3(k) of the [FLSA], or (ii) obtaining orders or contracts for services or for 22 23 2 24 25 26 27 28 Plaintiffs contend that Defendant should be equitably estopped from asserting inconsistent positions—i.e., maintaining that Taylor and Young are independent contractors, yet assuming for purposes of this motion that they are employees. However, Defendant is careful to frame its argument as a hypothetical. Moreover, under the Federal Rules of Civil Procedure, a party moving for summary judgment may accept the non-movant’s allegations as true for the limited purpose of summary judgment. See FRCP 56(g); see also FRCP 8(d)(2) (“A party may set out 2 or more statements of a claim or defense alternatively or hypothetically.”), 8(d)(3) (“A party may state as many separate claims or defenses as it has, regardless of consistency.”) (emphasis added). Here, Defendant merely argues that even accepting as true Plaintiffs’ allegations that they are employees, their FLSA claims still fail. Such an argument is permissible. 4 09cv2909 1 the use of facilities for which a consideration will be paid by the client or 2 customer; and 3 (2) Who is customarily and regularly engaged away from the employer’s 4 place or places of business in performing such primary duty. 29 C.F.R. § 5 541.500(a). 6 Importantly, the FLSA exemption includes not only the sales work itself, but also any “work 7 performed incidental to and in conjunction with the employee’s own outside sales or solicitations.” 29 8 C.F.R. ¶ 541.500(b). The case law supports this broad interpretation of “sales.” See, e.g., Wong v. HSBC 9 Mortg. Corp. (USA), 749 F. Supp. 2d 1009, 1013 (N.D. Cal. 2010) (finding that making a sale “is not an 10 activity that necessarily occurs at one time and/or in one location, but, rather, may comprise a number of 11 component activities”); Christopher v. Smithkline Beecham Corp., DBA GlaxoSmithKline, 635 F.3d 383, 12 398, 400-01 (9th Cir. 2011) (holding that pharmaceutical sales representatives are exempt as outside 13 salespersons, even though they did not make direct sales, take orders, or negotiate contracts—rather, 14 their activities were “preliminary steps toward the end goal” of sales and thus constituted sales activities 15 within the meaning of the exemption). 16 Here, Defendant points to substantial evidence in the record (mostly from Plaintiffs’ own 17 depositions and pleadings) demonstrating that both Taylor and Young fall under the “outside salesper- 18 son” exemption. 19 1. 20 With regard to the first prong of the exemption, Taylor and Young admitted that their primary “Primary Duty” 21 duty as a Financial Advisor was making sales. Even in the Complaint, they pled that their job was 22 primarily as a salesperson. See, e.g., Compl. ¶¶ 2, 45, 47, 48. Making sales was obviously paramount to 23 their success, since their earnings were based entirely on sales commissions. Moreover, under the broad 24 definition of “sales” discussed above, all of Taylor’s and Young’s incidental activities and solicitations 25 are construed as sales under the FLSA. Therefore, Taylor’s and Young’s primary activities were clearly 26 sales and sales-related. The Court finds that they have satisfied the exemption’s first prong. 27 // 28 // 5 09cv2909 1 2. “Customarily and Regularly” 2 With regard to the second prong, the phrase “customarily and regularly” is not a “majority of the 3 time” test. See, e.g., Lint v. Northwestern Mutual Life Insurance Company, 2010 WL 4809604 at *3 4 (S.D. Cal. Nov. 19, 2010) (finding that spending 10-20 percent of the time outside of the office engaged 5 in sales activity is sufficient for the exemption). The DOL likewise confirmed that selling or sales 6 related activity outside the office “one or two hours a day, one or two times a week” satisfied the test 7 for the exemption. See FLSA2007-2, DOL Opinion Letter from Paul DeCamp, Administrator at 3-4 8 (Jan. 25, 2007) (emphasis added). 9 Here, Defendant shows that Taylor and Young customarily and regularly engaged in sales 10 activity away from the W&R office. For example, Defendant points to evidence demonstrating that 11 Taylor frequently met with existing and prospective clients away from the office—wherever it was 12 convenient for the customer—in order to generate business and consummate sales. She testified that she 13 was consistently outside of the office engaged in sales activity, and the available records confirm as 14 much—showing that in some weeks, she was absent at least three or four days, and that she was 15 frequently absent from company meetings. (See, e.g., Taylor Depo. Tr. 167:6-25, 168:17-19, 219:9-25, 16 227:22-228:13; Bertrand Decl., ¶ 5, Exhibit C.) Taylor’s accounts of her constantly being out of the 17 office on sales meetings are confirmed by Young, who testified that Taylor was out of the office 18 “perhaps 40, 50 percent” of the time. (Young Depo. Tr. 184:7-13, 186:7-10.) Taylor’s outside sales 19 activity therefore meets the “customarily and regularly” threshold. Finally, the Court notes that Taylor 20 failed to preserve her calendars, which would have provided relevant evidence relating to the extent of 21 her outside sales activity. 22 Similarly, Young frequently sought to develop customers to generate sales by holding seminars, 23 meeting with business professionals, and hosting gatherings. Most of these efforts took place outside of 24 the office—at the gym, restaurants, sporting events, community events, car dealerships, etc. (See, e.g., 25 Young Depo. Tr. 199:8-17, 201:13-18, 202:1-6, 203:3-17, 204:23-205:2, 205:24-206:9, 206:23-207:18, 26 209:19-22.) Young testified in his deposition that he spent “easily 30 or 40 percent” of his time in any 27 given week on sales activity outside the office, which far surpasses the “customarily and regularly” 28 6 09cv2909 1 threshold under the FLSA exemption. (Young Depo. Tr. 215:10-15, 223:10-15.) Consequently, the 2 Court agrees that both Taylor and Young have satisfied the second prong of the exemption. 3 3. Plaintiffs’ Arguments 4 In response, Plaintiffs claim the outside sales exemption does not apply because the sales were 5 technically consummated inside the office (when they were approved by management). Even assuming 6 that fact to be true, Plaintiffs misconstrue the FLSA definition of sales. As noted above, the exemption 7 includes not only the sales work itself, but also any “work performed incidental to and in conjunction 8 with the employee’s own outside sales or solicitations.” 29 C.F.R. ¶ 541.500(b) (emphasis added). 9 Because Taylor and Young conducted substantial incidental work and solicitations outside of the office, 10 it does not matter that the actual moment of sale occurred inside the office. Plaintiffs emphasize the use 11 of “outside sales” in Section 541.500(b) and contend that there is a question of fact regarding whether 12 W&R intended the Advisors to conduct “outside sales” versus “inside sales.” However, the Court 13 simply does not see how W&R’s intent—whatever it may have been—factors into the two-pronged 14 analysis for the FLSA exemption. Even if it did, the PCA’s language quoted above indicates that W&R 15 intended for Advisors have free rein to conduct their sales work in the manner and place of their 16 choosing. 17 Plaintiffs next contend that there are genuine disputes of fact as to the extent of Taylor’s and 18 Young’s outside sales. They point to Taylor’s June 2, 2011 declaration in support. (Doc. 117.) However, 19 the Court finds that this declaration contradicts Taylor’s earlier deposition, in which she testified at 20 length about her extensive outside sales activity. Unlike her deposition, her subsequent declaration 21 indicates that nearly all of her activities were conducted inside the office, concluding that she spent only 22 about 5 percent of her time outside the office engaged in sales activities within the meaning of the 23 FLSA. Likewise, Plaintiffs point to Young’s June 2, 2011 declaration (Doc. 123) as creating a question 24 of fact, but for the same reasons, the Court finds that this declaration contradicts his earlier deposition. 25 Because these subsequent declarations appear to be self-serving, they cannot create a genuine question 26 of material fact to defeat summary judgment. Nelson v. City of Davis, 571 F.3d 924, 927 (9th Cir. 2009) 27 (“The general rule in the Ninth Circuit is that a party cannot create an issue of fact by an affidavit 28 contradicting his prior deposition testimony.”). 7 09cv2909 1 Finally, Plaintiffs assert that because Taylor and Young never performed outside sales activity 2 during their months-long training at W&R, the FLSA exemption does not apply to that period of time. 3 However, this argument fails because Taylor and Young did not properly plead an FLSA claim for their 4 training phases. For example, Taylor alleges in her FAC that she began working for W&R on November 5 1, 2005. She cannot now expand the scope of her FLSA claim by identifying her start of “employment” 6 as June 13, 2005, so as to include the training period. Young’s argument likewise fails. By failing to so 7 allege in FAC, they waived their right to claim compensation under the FLSA for that period of time. 8 Regardless, such a claim would be time-barred. Under the FLSA, an action for overtime pay must be 9 commenced within two years, or three years if the claim arises out of “a willful violation.” 29 U.S.C. § 10 255(a). Here, even if Taylor and Young could show a willful violation of the FLSA, they did not file the 11 Complaint until December 2009, more than three years after their respective 2005 training periods. 12 Having found Plaintiffs’ arguments unconvincing, the Court concludes that Taylor and Young 13 satisfy both prongs of the outside salesperson exemption and that there is no genuine dispute of material 14 fact as to their exempt status. Because they are exempt, Plaintiffs’ FLSA claims fail as a matter of law, 15 regardless of whether Taylor and Young are considered employees or independent contractors. The 16 Court therefore grants Defendant’s motions for partial summary judgment as to both Taylor and Young. 17 B. 18 Plaintiffs’ Motion for Conditional Class Certification The FLSA expressly authorizes class (or “collective”) actions where the employees are 19 “similarly situated.” 29 U.S.C. §§ 207, 216(b). Like Defendant’s motions for partial summary judgment, 20 this motion involves only the FLSA causes of action. Because the Court grants the motions for partial 21 summary judgment above, no FLSA claims survive, and the Court therefore denies as moot Plaintiffs’ 22 motion for conditional class certification. 23 IV. 24 CONCLUSION For the reasons set forth above, the Court GRANTS Defendant’s Motion for Partial Summary 25 26 Judgment as to Plaintiff Michael Taylor, GRANTS Defendant’s Motion for Partial Summary Judgment 27 // 28 // 8 K:\COMMON\BATTAGLI\DJ CASES\2 Orders to be filed\9cv2909 Summary Judgment Order.wpd 09cv2909 1 as to Plaintiff Kenneth Young, and DENIES AS MOOT Plaintiffs’ Motion for Conditional Class 2 Certification. 3 4 IT IS SO ORDERED. 5 6 DATED: January 3, 2012 7 8 Hon. Anthony J. Battaglia U.S. District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 K:\COMMON\BATTAGLI\DJ CASES\2 Orders to be filed\9cv2909 Summary Judgment Order.wpd 09cv2909
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
