Section 7 of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 207 (Supp.1982) by failing to pay Cote overtime for hours worked in excess of 40 each week (Count I); that Burroughs breached its written employment contract with plaintiff "requiring termination only for just cause" and an "implied covenant . . . to deal fairly and in good faith" (Count II), and that Burroughs's employees tortiously interfered with plaintiff's ability to perform the duties of her employment (Count III). For the reasons set out below I will grant defendant's motion for summary judgment on all three counts.
Burroughs is a North Carolina corporation engaged in the manufacture and sale of pharmaceutical products. Cote was employed by Burroughs as a "Professional Representative" or "detail person." It is undisputed that the responsibility of detail persons is to call regularly on physicians, hospitals, and pharmacies and to increase the sale of Burroughs' products by "detailing" the recommended indications of these drugs to potential prescribers and retailers. Burroughs trains its detail persons for six to eight months and provides them with an extensive set of selling tools including a weekly schedule, preprinted individual Physician and Pharmacy Call Cards, Physician Work Plan Pages identifying who to call during a particular week, and a Selling Plan identifying the drugs to be detailed.
The "detail person" works out of his home and is paid a monthly salary ($1,813 in Ms. Cote's case) irrespective of the number of hours, days, or weeks worked in a month. For one or two days every few months the representative is accompanied on the calls by the District Sales Manager who evaluates the performance of the detail person. In addition each detail person records daily sales, details and sample distribution on a system using computer cards. The representative's job performance is evaluated based on sales results and standardized requirements such as calling on a certain number of physicians per day and presenting each physician with a minimum number of product details.
Cote completed her training as a detail person in February, 1975 and signed an employment contract at that time. She then began work in her assigned territory in northern Virginia.
Cote's performance was satisfactory to Burroughs until 1980 when her performance fell below Burroughs's standards. On June 17, 1980 Cote was placed on a sixty day probation period which provided for possible termination if she did not make a good faith effort to correct the deficiencies. The probation was extended to October 17, 1980 because of Cote's illness.
Cote did not completely meet the requirements of her probation, but because the District Manager felt she had shown improvement, her employment was not terminated. However, on March 31, 1981, Cote was again placed on probation, this time for ninety days, and she was told that "failure to comply with acceptable standards will result in immediate termination." The 1981 probation was extended because of an injury. At the end of this extended period Cote was terminated for failure to meet the terms of the probation. She was paid one month's additional salary in lieu of thirty days' notice.
The FLSA, 29 U.S.C. § 207 (Supp. 1982) specifies that any employee who works longer than forty hours must receive "compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed." 29 U.S.C. § 213(a) (Supp.1982), however, provides an exemption to this overtime requirement, which applies to "any employee employed in a bona fide executive, administrative, or professional capacity . . ."
Defendants contend that Cote can be classified as an administrative employee under the regulations promulgated by the Labor Department in 29 C.F.R. § 541.2.
Both parties agree that a "short form" test in 29 C.F.R. 541.2(e)(2) applies. This sub-paragraph states that when an employee is compensated at a rate of not less than $250 per week, he is considered administrative if his primary duty consists of the performance of work described in 541.2(a) and "includes work requiring the exercise of discretion and independent judgment." I believe that this short form test in 541.2(e)(2) may be read to apply only to academic personnel, but since both plaintiff and defendant have agreed to apply this less stringent test, and since I believe the same outcome would result under either the "short form" or the full analysis, I am willing to assume that the short form test is appropriate in these circumstances.
Plaintiff concedes that the position of Staff Representative satisfies the requirement of 541.2(a)(1) but argues that the position does not require the exercise of discretion and independent judgment mandated by 541.2(b) or 541.2(e)(2). Cote characterizes this as an issue of fact, not appropriate for summary judgment. Unlike Richter v. Barrett, 173 F.2d 320 (3d Cir.1949), cited by plaintiff, however, there are no material issues of fact in dispute as far as Ms. Cote's job duties and description. What is at issue is whether these facts present evidence of the exercise of discretion and judgment as required by the administrative exemption. The situation is most closely analogous to that presented in Donovan v. Frezzo Brothers, Inc., 678 F.2d 1166 (3d Cir.1982), in which the court had to decide on the basis of undisputed facts whether mushroom compost was an agricultural commodity. This was held to be "not an issue of fact which is susceptible of the same determination in every case. To the contrary it is an issue of law which must be decided by examining the statutory definition of agriculture contained in the statute in question." Id. at 1171.
The basic job description and responsibilities of a "detail person" are undisputed. Plaintiff maintains that those duties do not meet the regulatory definition of independent judgment and discretion, but are rather the exercise "of skill in applying techniques, procedures, or specific standards," 29 C.F.R. 541.207(b)(1) or else are "decisions relating to matters of little consequence." 29 C.F.R. 541.207(b)(2). For example, plaintiff maintains that the district sales manager establishes the detail person's weekly schedule. The detail person's only responsibility is to plan his schedule to minimize the necessary travel time. Plaintiff further argues that because the choice of which product to detail is preordained by the defendant's selling plan (which includes specific objectives, visual aids to be used, additional points to make on competitive products, and a suggested closing statement) there is little or no discretion given to the detail person. Considering these arguments and viewing these record facts in the light most favorable to the party opposing the motion for summary judgment as mandated by United States v. Diebold, Inc., 369 U.S. 654, 82 S. Ct. 993, 8 L. Ed. 2d 176 (1962), defendant must prevail.
Accepting that Cote had only mechanically to apply specified procedures in setting up her physician visit schedule, and in "detailing" her products there is ample record evidence to show that the job required the exercise of independent judgment and discretion in many other areas. Circumstantial evidence of Cote's exercise of discretion is that plaintiff was commended for her initiative in increasing sales of a certain drug by cultivating a good working relationship with nurses at a particular clinic and asking for their help in reminding physicians about the drug. (Exhibits to Memorandum in Support of Motion of Defendant Burroughs Wellcome Co. for Summary Judgment, Exhibit D-5). Plaintiff herself presents evidence of the type of judgment and discretion required of her. A supervisor's report contains the following admonishment:
Susan, to be productive in any territory, the most critical aspect to putting the total package together is making a plan. With the wide variety of responsibilities that every representative has, a specific plan must be available to everyone to follow through with each aspect of your job. When determining what is to be accomplished in your territory, make full use of your selling tools, i.e. the physician activity data, the sample allocation list, the PAD list, the TCR performance, etc. You have a multitude of tools that can be programmed into your planning for everyday usage . . .
Plaintiff's Answer to Defendant's Motion for Summary Judgment, Exhibit B.
Further example of the kind of discretion and judgment expected from detail persons is illustrated in the selling plan cartoons put out by Burroughs, contrasting an effective selling performance with an ineffective one. (Plaintiff's Exhibit L). Clearly, on entering the physicians office (even if plaintiff had very little choice in deciding which physician to visit or which product to detail) the detail person was expected to use a wide degree of discretion in deciding how to encourage the use of the product.
While it is the employer's burden to prove that the employee is exempt from the coverage of the Act, Richter v. Barrett, 173 F.2d 320 (3d Cir.1949), I believe that on the undisputed facts Burroughs has met this burden. Accordingly I will grant defendant's motion for summary judgment on Count I on the ground that Cote was in an administrative position exempt from the wage and hour provisions of the FLSA.
In Count II Cote alleges that Burroughs breached its written employment contract "requiring termination only for just cause" and an "implied covenant . . . to deal fairly and in good faith." Both Burroughs and Cote agree that the choice of law presents no true conflict because the only relevant state laws (North Carolina where defendant corporation is located and where the contract was signed, and Virginia where plaintiff resided and worked) are in accord on the pertinent issues.
The contract contained in a letter of February 3, 1975 from Burroughs to Cote provided as follows:
Your employment may be terminated in one month's notice either by you or by the Company, but the Company reserves the right to pay you one month's salary and to terminate your employment immediately or at any time during such period. The Company further reserves the right to terminate your employment without notice and without payment of one month's salary in lieu of notice for conduct deemed by the Company to be to its detriment.