Martin v. Sprint United Mgmt. Co.

273 F.Supp.3d 404

Jamie MARTIN and Daneisha Singleton, on behalf of themselves and all others similarly situated, and the Proposed New York Rule 23 Class, Plaintiffs,

v.SPRINT UNITED MANAGEMENT CO., Credico (USA), LLC, and Wallace Morgan, Inc., Defendants.

15 Civ. 5237 (PAE)

United States District Court, S.D. New York.

Signed September 27, 2017

Anna Purna Prakash, Brittany Bachman Skemp, Rachhana T. Srey, Nichols Kasters, L.L.P., Minneapolis, MN, Frank Joseph Mazzaferro, Joseph A. Fitapelli, Brian Scott Schaffer, Fitapelli & Schaffer LLP, New York, NY, for Plaintiffs.

William Fuger Cusack, III, Wilson Elser Moskowitz Edelman & Dicker LLP, Florham Park, NJ, Joseph Ferdinand Tremiti, Tremiti LLC, Valerie Lorraine Hooker, Venturini & Associates, Elise Michelle Bloom, Patrick Kramer Rice, Rachel S. Philion, Proskauer Rose LLP, Gabrielle Frances Levin, Gibson, Dunn & Crutcher, LLP, New York, NY, Mark W. Batten, Proskauer Rose LLP, Boston, MA, Nicole A. Eichberger, Proskauer Rose LLP, New Orleans, LA, Greta Bradlee Williams, Jason C. Schwartz, Ryan Carlton Stewart, Jennifer H. Rearden, Gibson, Dunn & Crutcher, LLP, Washington, DC, Theodore J. Boutrous, Jr., Gibson, Dunn & Crutcher, LLP, Los Angeles, CA, for Defendants.

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge:

Plaintiffs Jamie Martin and Daneisha Singleton bring this action on behalf of themselves and similarly situated persons, alleging violations of the Fair Labor Standards Act, 29 U.S.C. § 201, et. seq. ("FLSA"), and the New York Labor Law, N.Y. Lab. Law § 650, et. seq. ("NYLL"). Plaintiffs served as field agents securing low-income customers to acquire wireless telephones of defendant Sprint/United Management Company ("Sprint") pursuant to a federal subsidy program. They claim that they were misclassified as independent contractors, as opposed to as employees. Plaintiffs claim that, as a result, they were denied statutorily required minimum wage and overtime compensation. Plaintiffs claim that Sprint and co-defendants Credico (USA), LLC ("Credico") and Wallace Morgan, Inc. ("Wallace Morgan") are jointly responsible for this willful misclassification. Plaintiffs further claim that defendants failed to provide them with required wage notices and statements.

Pending now are the parties' cross-motions for summary judgment. These motions raise three issues: (1) whether plaintiffs were employees rather than independent contractors under the FLSA and NYLL; (2) if so, whether Sprint and Credico were joint employers (with Wallace Morgan) of plaintiffs, such that they can be held liable for the alleged FLSA and NYLL violations; and (3) whether, even if plaintiffs are employees, they are exempt from FLSA and NYLL requirements as outside salespeople.

For the reasons that follow, the Court holds for defendants on the latter two issues. Specifically, the Court holds that, even assuming arguendo that plaintiffs were employees rather than independent contractors, (1) Credico and Sprint cannot be held liable as plaintiffs' joint employers, and (2) the outside sales exemptions to the FLSA and NYLL apply. These rulings preclude liability altogether for Sprint and Credico, and they preclude liability for Wallace Morgan on plaintiffs' minimum-wage and overtime claims. Accordingly, the Court grants defendants' motions for summary judgment and denies plaintiffs' motion for partial summary judgment. As to the sole remaining claims—plaintiffs' wage-notice claims under the NYLL against Wallace Morgan—the Court, as explained below, commissions letter-memoranda from plaintiffs and Wallace Morgan as to the effect of the Court's rulings on these claims.

I. Background¹

A. Factual Background

1. The Lifeline Program

The federal government's Lifeline Program was founded in the 1980s with the goal of "ensur[ing] that low-income consumers have access to phone service." Pl. 56.1 ¶ 1. Under the program, designated telecommunications carriers may provide Lifeline Program services to eligible consumers in exchange for subsidies. See 47 C.F.R. §§ 54.201, 54.403(a). These subsidies are administered by the Universal Service Administrative Company ("USAC"), a not-for-profit corporation designated to perform this function by the Federal Communications Commission ("FCC"). Sprint Counter 56.1 ¶ 3. Since 2005, Lifeline Program services have included wireless service and phones in addition to traditional landline phones. Pl. 56.1 ¶ 2.

Lifeline Program services are available only to persons who meet certain qualifications, including having an income below applicable guidelines. JSF ¶¶ 35, 37. To be eligible for Lifeline Program services, applicants must also certify that they will not exceed the maximum of one Lifeline Program-enrolled mobile phone per household. Id. ¶ 35.

Telecommunications carriers are not required to charge consumers for Lifeline Program services, see Pl. 56.1 ¶ 4, but they may charge qualified low-income customers for additional services, see Sprint Counter 56.1 ¶ 4. For example, while Lifeline Program enrollees may receive a free wireless phone and a free preset amount of minutes and messages, Pl. 56.1 ¶ 6, enrollees may also purchase additional minutes and messages above this preset amount, Credico Counter 56.1 ¶ 6.

2. The Parties

Sprint is a telecommunications carrier that offers Lifeline Program products and/or services through Assurance Wireless, a brand that Sprint acquired in 2009. Id. ¶¶ 7, 35–37, 52. Sprint's receipt of subsidies from USAC is conditioned on Sprint's compliance with the applicable program regulations. Sprint Counter 56.1 ¶ 3. Sprint is also required to "[p]ublicize the availability of Lifeline service in a manner reasonably designed to reach those likely to qualify for the service." See 47 C.F.R. § 54.405(b).

To promote and market Lifeline services, Sprint contracts with third-party Outreach Agencies ("OAs"). Pl. 56.1 ¶ 14. Sprint also uses the National Lifeline Accountability Database ("NLAD"), which detects duplicate applications to make sure that qualified applicants do not receive more than one Lifeline Program benefit, either through the same or multiple providers. Sprint 56.1 ¶¶ 9–10.

Credico is an OA that has contracted directly with Sprint since September 2012. Pl. 56.1 ¶¶ 16, 18. Credico outsources sales and marketing services for its clients, which include other telecommunications carriers besides Sprint, to independent sales offices ("ISOs").² Pl. 56.1 ¶ 17; Credico Counter 56.1 ¶ 17. Sprint pays Credico on a monthly basis. Pl. 56.1 ¶ 187. In September 2013, Sprint and Credico entered into an Amended and Restated Outreach Agency Agreement (the "OA Agreement") effective September 1, 2013, amending their original agreement dated September 15, 2012. JSF ¶ 41; Pl. 56.1 ¶ 18. Attached to the OA Agreement was a copy of Sprint's Standard Operating Procedures ("SOPs"). JSF ¶¶ 39, 41. Under the OA Agreement, Credico was authorized to collect applications for Sprint's Assurance Wireless Program within delineated areas of New York (including the Bronx, Queens, and Manhattan). Pl. 56.1 ¶¶ 20, 93. Credico was not permitted to subcontract or use third parties to collect applications for the Assurance Wireless Program without Sprint's prior written consent. Id. ¶ 21.

Wallace Morgan is an ISO with whom Credico has subcontracted, with Sprint's consent, to collect applications for Sprint's Assurance Wireless Program. Pl. 56.1 ¶ 22. Credico assigned an "Account Manager" to Sprint to serve as a main point of contact between Sprint and Wallace Morgan. Id. ¶¶ 23–24. Wallace Morgan and Credico signed a subcontractor agreement, to which Sprint was not a party, dated October 17, 2014. JSF ¶ 44; Sprint 56.1 ¶ 67.³ Wallace Morgan and Sprint signed a document entitled "Authorized Office Acknowledgment to Participate in Assurance Wireless Program." First Srey Decl, Ex. 8. It stated that Wallace Morgan would "only source Assurance Wireless products from [Credico] and no other distributors or master agents." Id. at 1. The document further stated that Wallace Morgan was "authorized to hire and train a team (referred to herein as "field agents" or "Staff") to promote Assurance Wireless in the field, solicit and process Assurance Wireless applications ... and activate/program Assurance Wireless devices via the methods approved." Id.

Plaintiffs are field agents who were hired by Wallace Morgan to solicit and collect applications for wireless phones and services from individuals seeking to enroll in the Lifeline Program through Sprint's Assurance Wireless brand. JSF ¶ 52. Martin held the title of "account executive" from approximately March 29, 2015, and "corporate trainer" from approximately mid–April 2015, through May 7, 2015. Id. ¶ 2. Singleton held the title of "account executive" from approximately April 3, 2015, through mid–April 2015, and "corporate trainer" from approximately mid–April 2015 through May 7, 2015, id. ¶ 4.

3. The Responsibilities of Field Agents

As noted, field agents on the Assurance Wireless campaign solicited and collected applications from potentially qualifying Lifeline Program applicants. JSF ¶ 52 ("Plaintiffs understood their job duty to be collecting applications from potentially qualified individuals who wanted to enroll in the Lifeline Assistance Program through Assurance."). Field agents may work on only one campaign at a time. Pl. 56.1 ¶ 176.⁴

As set forth in Sprint's OA Agreement, field agents were required to "inform and educate potential customers about Assurance Wireless, determine and advise on an individual's qualification for the program and engage the eligible customers in the application process for Assurance Wireless." Pl. 56.1 ¶ 59. Field agents distributed Sprint-provided materials, visiting "targeted community locations and attending public or private community events."Id.

In initially addressing potential applicants for phones pursuant to the Lifeline Program, field agents were required, as set forth in the Sprint SOPs, to begin by "utiliz[ing] an...