Kushelowitz v. Teva Pharm., U.S.

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BARRY KUSHELOWITZ, KERRI BALDWIN, Plaintiffs, v. TEVA PHARMACEUTICALS, USA, INC. and I TEVA SALES AND MARKETING, INC.,^[1] Defendants.

Civil Action No. 22-7599 (SDW) (JRA)

United States District Court, D. New Jersey

June 29, 2023

NOT FOR PUBLICATION

JOSE R. ALMONTE, U.S.M.J.

OPINION

SUSAN D. WIGENTON, U.S.D.J.

Before this Court is Defendants Teva Pharmaceuticals, USA, Inc. and Teva Sales and Marketing, Inc.'s (“Defendants”) Motion (D.E. 8) to Partially Dismiss Plaintiffs Barry Kushelowitz and Kerri Baldwin's Complaint (D.E. 1 (“Compl.”)), pursuant to Federal Rules of Civil Procedure (“Rules”) 12(b)(1) and 12(b)(6). Venue is proper pursuant to 28 U.S.C § 1391. This opinion is issued without oral argument pursuant to Rule 78. For the reasons stated herein Defendants' motion is DENIED.

I. BACKGROUND AND PROCEDURAL HISTORY^[2]

Defendant Teva Pharmaceuticals, USA, Inc. (“Teva”) is a global pharmaceutical company incorporated in Delaware, with its principal place of business in Parsippany, New Jersey. (Compl. ¶¶ 23, 30.) Defendant Teva Sales and Marketing, Inc. is a wholly owned subsidiary of Teva. (D.E. 25 at 2.)^[3]Plaintiffs are two individuals who worked for Teva in the role of “Sales Specialist.” (Id. ¶ 4.) When newly hired into this role, they were required to complete a rigorous training program comprised of coursework and examinations, and they regularly worked more than 40 hours per week to complete the necessary coursework and exam preparation. (Id. ¶¶ 15, 19, 32-35.) However, Plaintiffs and other Sales Specialist trainees were not paid overtime wages during this training period because Teva had a company-wide policy of classifying them as exempt from overtime pay requirements. (Id. ¶¶ 6-7, 15-17, 19-21, 25.) Plaintiffs bring this suit on behalf of themselves and similarly situated Sales Specialists for overtime pay under the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”). (Id. ¶¶ 66-90.)

Plaintiff Baldwin completed Teva's Sales Specialist training program in Lawrenceville, Georgia, from approximately April 2020 through October 2021. (Id. ¶ 18.) She brings claims arising under the FLSA and seeks to represent an opt-in collective of all “current and former employees of [Teva] working as Sales Specialists throughout the United States” from August 19, 2016, through the resolution of this action (the “FLSA Collective”). (Id. ¶¶ 56, 82-90.)

Plaintiff Kushelowitz completed the training program in New York, New York from approximately March through May 2019. (Id. ¶ 14.) He brings claims exclusively arising under the NYLL, and seeks to represent an opt-out class of all “current and former employees of [Teva] working as Sales Specialists [in] New York” from August 19, 2016, through the resolution of this action (the “New York Class”). (Id. ¶¶ 14, 46, 66-81.)

Plaintiffs filed this putative class and collective action on December 30, 2022, having previously executed a tolling agreement with Teva which tolled the statutes of limitations for their FLSA and NYLL claims effective August 19, 2022. (Compl. ¶ 46 n. 1.) In Counts One through Three of the Complaint, Plaintiff Kushelowitz asserts claims on behalf of the New York Class for unpaid overtime wages, failure to provide wage notices, and failure to provide accurate wage statements, in violation of the NYLL and related regulations promulgated by the New York State Department of Labor. (Id. ¶¶ 66-81.) In Count Four, Plaintiff Baldwin asserts a claim on behalf of the FLSA Collective for unpaid overtime in violation of the FLSA. (Id. ¶¶ 82-90.)

On January 26, 2023, Defendants answered the Complaint, asserting among other affirmative defenses that “[t]he NYLL does not contain any provision or regulation addressing outside salespersons in training, nor has the NYLL expressly adopted 29 C.F.R. § 541.705,” and that “Plaintiffs and the purported class and/or collective are exempt from applicable overtime laws.” (D.E. 5 at 18.) Defendants subsequently filed the instant motion to dismiss Counts One through Three of the Complaint-the NYLL claims-and the parties timely completed briefing. (D.E. 8, 13, 15.)

II. LEGAL STANDARDS

An adequate complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). When considering a motion to dismiss under Rule 12(b)(6), a court must “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)). However, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see also Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009) (discussing the Iqbal standard).

This Court has original jurisdiction over civil actions arising under federal law, such as the FLSA, and it may generally exercise supplemental jurisdiction over state law claims that are “so related” to the claims within its original jurisdiction “that they form part of the same case or controversy.” 28 U.S.C. §§ 1331, 1367; see Higgins v. Bayada Home Health Care Inc., 62 F.4th 755, 758 n.8 (3d Cir. 2023). A district court may decline to exercise jurisdiction over a state law claim that “raises a novel or complex issue of State law,” that “substantially predominates over the [federal] claim,” or that presents “other compelling reasons for declining jurisdiction.” 28 U.S.C. § 1367(c).

III. DISCUSSION

Defendants move to dismiss the NYLL claims, asserted in Counts One through Three of the Complaint, for failure to state a claim. (D.E. 8-1 at 9-15.)^[4] In the alternative, Defendants argue that the NYLL claims should be dismissed for lack of subject matter jurisdiction and that this Court should decline to exercise supplemental jurisdiction over them as a matter of discretion. (Id. at 15-24.) For the following reasons, this Court will deny the instant motion to dismiss as premature, allowing Defendants to renew the motion after some discovery.

A. Sufficiency of the Claim for Overtime Wages under the NYLL

i. Legal Standard

The NYLL requires employers to pay certain minimum wages to their employees, and provides a right of action for any employee who is paid less than the wage required by law. See N.Y. Lab. Law §§ 650-52, 663. The NYLL does not specifically address overtime pay, but New York Department of Labor regulations concerning minimum wage standards incorporate the FLSA into the NYLL, stating that

[a]n employer shall pay an employee for overtime at a wage rate of one and one-half times the employee's regular rate in the manner and methods provided in and subject to the exemptions of sections 7 and 13 of 29 USC 201 et seq., the Fair Labor Standards Act of 1938, as amended[.]

12 N.Y. Comp. Codes R. & Regs. § 142-2.2. The NYLL and regulations defining “employee” state that an “outside salesperson” is not an employee. 12 N.Y. Comp. Codes R. & Regs. § 142-2.14(c)(5); see N.Y. Lab. Law § 651(5)(c).^[5]An “outside salesperson” is defined as

an individual who is customarily and predominantly engaged away from the premises of the employer and not at any fixed site and location for the purpose of . . . (i) making sales; (ii) selling and delivering articles or goods; or (iii) obtaining orders or contracts for service or for the use of facilities.

Id. New York law does not specifically address individuals who are training for outside sales positions.

Section 7 of the FLSA, which is incorporated by reference into the NYLL, generally requires employers to pay their employees an overtime wage of at least 150% of the employee's regular wage for any hours worked in excess of forty hours per week. 29 U.S.C. § 207(a)(1); see 12 N.Y. Comp. Codes R. & Regs. § 142-2.2; Gold v. New York Life Ins. Co., 59 N.Y.S.3d 316, 324 (N.Y.App.Div. 1st Dep't 2017), rev'd on other grounds by 32 N.Y.3d 1009 (N.Y. 2018) (“New York has adopted the manner, methods, and exemptions of the FLSA regarding overtime pay.”) However, section 13 of the FLSA exempts many categories of employees from this requirement, including those employed “in the capacity of outside salesman.” 29 U.S.C. § 213(a)(1). The FLSA defines a “sale” as “any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.” 29 U.S.C. § 203(k). Further definition of the FLSA's outside sales exemption is provided in regulations. See 29 C.F.R. § 541.500-504. An employee is exempt from overtime pay as an “outside salesman” only if his or her “primary duty” is making sales, or obtaining orders or contracts, and this work is “customarily and regularly” performed “away from the employer's place or places of business”-for example, at the customer's place of business or at customer's homes. 29 C.F.R. §§ 541.500(a), 541.502.

Federal regulations explicitly state that the outside sales exemption does not apply to certain trainees. See 29 C.F.R § 541.705 (the “Trainee Regulation”). That is, a section titled “Trainees” within a subpart titled “Definitions and Miscellaneous Provisions,” provides that the FLSA's outside sales exemption does “not apply to employees training for employment in an . . . outside sales . . . employee capacity who are not actually performing the duties of an . . . outside sales . . . employee.” Id. (emphasis added). As the United States Department of Labor expressed when the Trainee Regulation was added, it states nothing new, because “[t]he inquiry in all cases simply involves...