Modeski v. Summit Retail Solutions, Inc.

470 F.Supp.3d 93

Joseph MODESKI, et al., on behalf of themselves and all similarly situated employees, Plaintiffs,

v.SUMMIT RETAIL SOLUTIONS, INC., Defendant.

Civil Action No. 18-12383-FDS

United States District Court, D. Massachusetts.

Signed July 2, 2020

Benjamin L. Davis, III, George Edward Swegman, Michael A. Brown, Pro Hac Vice, Scott E. Nevin, Pro Hac Vice, Law Offices of Peter T. Nicholl, Baltimore, MD, for Plaintiffs Joseph Modeski, Giovanni Zammito, Nathan Damboise.

Benjamin L. Davis, III, Michael A. Brown, Pro Hac Vice, Scott E. Nevin, Pro Hac Vice, Law Offices of Peter T. Nicholl, Baltimore, MD, for Plaintiffs Lee Stearns, Austyn Prettyman, Siti Bahaman, William Finkelstein, Tyler Welsh, Apiffany Mayo, Samantha Courtney, Greg Vancleave, Tiffany Hoffman, Malinda Alexander, Jaime Webb, Richard Pace, Richard Macaruso, Cory Allen, Arielle Money, Marilyn Buffinga, Jeremy Williams, Teresa Schillero, Kevin Guerreiri, Stephanie Brekka, Christian King, Daniel Davis, III, Maureen Anstis, Dominic Jones, Leslie Pittman, Denise Sutch, Suad Asmar, Jennice Hamilton, Jeneane Diaz, Scott Wodzak, Robert Martin, Steven Katz, Lauren Turnbull, Jasmine Brown, Iieshia Meyers, Alicia Manning-Hope, Cassandra Quinones, Lisa Hunt, Isaac Spence.

Michael A. Brown, Pro Hac Vice, Scott E. Nevin, Pro Hac Vice, Law Offices of Peter T. Nicholl, Baltimore, MD, for Plaintiffs Cassandra White, Michael Makinen.

Scott E. Nevin, Pro Hac Vice, Law Offices of Peter T. Nicholl, Baltimore, MD, for Plaintiffs Russalina Nolden, Ruth Miralla.

Barry J. Miller, Hillary J. Massey, Michael E. Steinberg, Seyfarth Shaw, LLP, Boston, MA, for Defendant.

MEMORANDUM AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT

SAYLOR, C.J.

This is a claim for overtime compensation. The named plaintiffs were "Brand Representatives" who demonstrated products and provided free samples to customers at retail stores, including membership-only warehouse clubs such as Costco, BJ's, and Sam's Club. They have brought suit against their employer, defendant Summit Retail Solutions, for violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 - 219, and analogous laws of Maryland, New Jersey, New York, Ohio, and Pennsylvania.

Section 207 of the FLSA requires employers to compensate all non-overtime exempt employees at least one and one-half times their regular wage for each hour worked in excess of 40 hours per work-week. Only those who work in certain capacities, including "outside salesmen," are exempt from that requirement. Plaintiffs contend that Summit improperly classified its Brand Representatives as exempt and thus denied them overtime compensation to which they were entitled.

The parties have filed cross-motions for summary judgment on a single issue: whether plaintiffs are subject to the outside sales exemption ("OSE") in the FLSA, 29 U.S.C. § 213(a)(1). For the following reasons, the Court concludes that they are. Accordingly, defendant's motion will be granted, and plaintiffs’ motion will be denied.

I. Background

A. Factual Background

The following facts are set forth in the record and are undisputed except as noted.

Summit Retail Solutions, Inc. is a corporation that provides in-person marketing services. (See Pls. Mem., Ex. 3 ("Booth Dep.") at 25:21-26:3). Those services consist of demonstrating products and interacting with customers at the stores of Summit's "clients." (Pls. Mem., Ex. 1 at 5). Those clients include membership-only warehouse clubs such as Costco, BJ's Wholesale Club, and Sam's Club, as well as department stores and grocery stores. (Id. ). The Summit employees who perform the marketing services are referred to as "Brand Representatives." (See Booth Dep. at 48:16-49:4; Def. Mem., Ex. 3; Def. Mem., Ex. 4).¹

Each of the named plaintiffs—Nathan Damboise, Joseph Modeski, Rudy Ortiz, Jeffrey Wolfert, and Giovanni Zammito—worked for Summit as a Brand Representative sometime between 2014 and 2019. (See Pls. Mem., Ex. 7 ("Damboise Dep.") at 11:9-12 (January 2017 to July 2017); Modeski Dep. at 113:11-14, 83:18-21 (November 2014 to February 2017); Def. Mem., Ex. 7 ("Ortiz Dep.") at 87:3-6 (approximately 2015 to 2019); Pls. Mem., Ex. 6 ("Zammito Dep.") at 18:21-19:2, 41:2-5, 42:10-13 (approximately March 2015 to September 2015)).²

Brand Representatives perform their services at stores operated by Summit's clients. (See Pls. Mem., Ex. 1 at 5). The named plaintiffs typically worked at Costco, BJ's Wholesale Club, or Sam's Club stores. (See, e.g. , Modeski Dep. at 107:4-9; Damboise Dep. at 60:14-24; Zammito Dep. at 91:11-19).

At each store, Brand Representatives market a particular product at a designated display area. (Zammito Dep. at 91:11-23). They do so only for a limited period of time, typically four days. (See Modeski Dep. at 250:13-18). Summit employees refer to those arrangements—marketing a product at a certain store for several days—as "shows." (See, e.g. , id. ).

The products are typically a type of prepared food or a household item such as pillows. (Modeski Dep. at 122:2-21; Damboise Dep. at 63:24-64:6; Zammito Dep. at 57:5-14). Generally, the products have been purchased and are owned by Summit, rather than the operator of the retail store where the show takes place. (Booth Dep. at 43:11-17). They are not usually sold at the store and are only available near the display manned by the Brand Representatives. (Id. at 28:17-29:1; see, e.g. , Zammito Dep. at 91:11-23; Damboise Dep. at 71:22-72:3).³ At the end of each show, Summit typically ships away its unsold products, presumably to sell them elsewhere. (See Booth Dep. at 43:11-17).

During shows, Brand Representatives market the products directly to customers. They do so at the designated display area, where they demonstrate the product that is on sale and speak with customers. (Modeski Dep. at 109:5-111:23; Zammito Dep. at 59:9-60:14; Damboise Dep. at 64:10-65:1). Product demonstrations vary with the type of product. Brand Representatives typically display household items or model their use for customers; for food products, they offer free samples. (Modeski Dep. at 212:19-213:1; see, e.g. , Damboise Dep. at 64:10-65:1; Zammito Dep. at 59:13-18). They also speak to customers to try to convince them to buy the product. (Modeski Dep. at 109:11-21; Zammito Dep. at 59:13-18; Damboise Dep. at 64:10-65:1). When doing so, they sometimes use selling techniques to try to persuade customers, such as representing that it is the last day of a show in order to convey urgency to customers. (See, e.g. , Wolfert Dep. at 194:16-196:16). Some of those techniques have been taught to them by Summit, such as "assuming the sale" by placing the product in a customer's shopping cart. (Zammito Dep. at 99:1-24; see, e.g. , Damboise Dep. at 64:21-65:4).

However, customers cannot purchase the products directly from Brand Representatives. (Booth Dep. at 41:14-19). Instead, they have to do so at the store's cash registers. (Booth Dep. at 41:14-19, 87:7-10). Those cash registers are operated by the employees of Summit's clients. (Def. Mem., Ex. 10 ("Booth Decl.") ¶ 5; Pls. Mem., Ex. 8 ("Stipulations") ¶ 4). This is not due to any legal or regulatory restrictions on Summit's business. (Stipulations ¶ 2). Rather, it is a restriction imposed by Summit's clients "[i]n order to control inventory and maintain a generalized control over their store operations." (Booth Decl. ¶ 5).

Even if a Brand Representative convinces a customer to take a product, that does not necessarily mean the customer will buy it. Sometimes, customers take a product out of their cart before reaching the cash register. (See, e.g. , Damboise Dep. at 161:7-13; Modeski Dep. at 129:22-130:3). A customer may also buy a product even if it has not been directly pitched to them by a Brand Representative; for example, occasionally customers simply take a product from the display. (See, e.g. , Damboise Dep. at 160:5-11; Modeski Dep. at 252:21-253:7; Zammito Dep. at 161:20-162:8).

Brand Representatives also perform a variety of tasks in support of their shows. They set up and dismantle their product displays. (Def. Mem., Ex. 3; Def. Mem., Ex. 4; Pls. Mem., Ex. 1 at 14). They stock them with products and restock them as needed. (Def. Mem., Ex. 3; Def. Mem., Ex. 4; Booth Dep. at 78:16-24). Occasionally, they transport the products from one store to another. (See, e.g. , Modeski Dep. at 245:1-23). They manage their inventory of products, which involves tracking the number of products delivered, counting the number sold, and submitting reports to their managers. (Booth Dep. at 73:7-75:7). Managing the inventory also sometimes requires tracking down stray products that customers have left in a client's store outside the display area. (See, e.g. , Damboise Dep. at 161:7-17). Finally, they participate in conference calls to discuss sales performance or to share sales techniques. (Booth Dep. at 75:8-77:11).

Brand Representatives are compensated in two forms: a base hourly wage and commissions. (Pls. Mem., Ex. 9 at 7-9). They are typically paid between $10 and $15 per hour. (See, e.g. , Damboise Dep. at 49:4-7; Zammito Dep. at 52:1-5; Modeski Dep. at 119:16-22). They are also eligible for commissions if they reach certain sales goals. (Pls. Mem., Ex. 9 at 7-9). Summit determines their commission eligibility approximately every four weeks by taking a certain percentage of the sales made at a client's register for products they had marketed, known as a "calculated commission," and comparing that to their hourly wages. (Id. ; Booth Dep. at 100:1-6). If Brand Representatives’ calculated commission exceeds their hourly wages, then they are entitled to a "true-up" payment to make up the difference. (Pls. Mem., Ex. 9 at 7-9; Booth Dep. at 99:13-21). If their calculated commission is less than their hourly wages, they do not receive any true-up payment and the difference is subtracted from their calculated commission for the next period. (Pls. Mem., Ex. 9 at 7-9).

The parties dispute the importance...