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GUSDONOVICH v. BUSINESS INFORMATION CO.

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA


July 31, 1985

JOHN E. GUSDONOVICH, JR., Plaintiff,
v.
BUSINESS INFORMATION COMPANY, a corporation, et al., Defendants

The opinion of the court was delivered by: DIAMOND

MEMORANDUM OPINION

 GUSTAVE DIAMOND, UNITED STATES DISTRICT JUDGE

 Presently before the court are cross-motions for summary judgment filed by the plaintiff and defendants in the above-captioned case. For the reasons set forth below, plaintiff's motion will be granted in part and denied in part, and defendants' motion will be granted in part and denied in part.

 This action arose out of plaintiff's employment with and subsequent discharge by the defendant corporation. In Count I of the complaint, pursuant to the Federal Labor Standards Act ("FLSA"), 29 U.S.C.A. § 201 et seq. (1965), the plaintiff claims that he was wrongfully classified as a salaried employee by the defendant corporation, and seeks $ 44,504.52 in unpaid overtime wages and liquidated damages. In Count II the plaintiff claims that he was wrongfully discharged for asserting his statutory rights under the FLSA and the Pennsylvania Minimum Wage Act of 1968, and seeks $ 54,502.52 in unpaid overtime wages, liquidated damages, and punitive damages.

 The defendants respond that the plaintiff was a bona fide administrative or professional employee, and, thus, was exempt from the overtime provisions of the FLSA. Defendants further respond that the plaintiff was not wrongfully discharged because he was properly dismissed for poor job performance.

 The following uncontested facts are taken from the pleadings of the parties and the defendants' answers to the plaintiff's first set of interrogatories.

 The corporate defendant, Business Information Corp. ("BIC"), is a Pennsylvania corporation, which investigates and collects information for insurance companies, businesses and individuals. The individual defendants are the shareholders and managers of BIC. For the purposes of this litigation, the parties have stipulated that BIC is engaged in interstate commerce.

 The plaintiff, John E. Gusdonovich, Jr., is a former employee of BIC, who had been employed in the capacity of "investigator" from July of 1979 through January of 1982. During this time the plaintiff's primary duty was the investigation of insurance claims. Such investigation included the search of public records, the serving of subpoenas and orders, surveillance, the interrogation of witnesses, and additional duties arising in the course of and subsequent to such investigations. The majority of this work was done away from BIC's office. The plaintiff was not a licensed private investigator, and he did not supervise the work of any employees of BIC. No specialized education was required to obtain a job as an investigator with BIC. Defendants' answers to plaintiff's interrogatories at 43.

  Investigators were paid on a salary basis. Each investigator was required to produce 168 billable hours (i.e. hours that would be billed to clients) each month, but not all of the hours worked by an investigator were considered to be billable. Further, an investigator's billable hours could be reduced if it was determined by his supervisor that a) the hours worked were in excess of the correct time spent on the job; b) the result achieved was not commensurate with the hours worked; c) limitations imposed by the client required that the hours be reduced; or d) the work performed was a duplication of effort. (Defendant's answers to plaintiff's interrogatories at 10.)

 I. Administrative and Professional Exemptions

 The parties first seek summary judgment on the issue, whether the plaintiff was a bona fide administrative or professional employee within the meaning of 29 U.S.C.A. § 213(a)(1) (1965) and 19 C.F.R. §§ 541.2, 541.3, thus, rendering him exempt from the overtime provisions of 29 U.S.C.A. § 207.

 The defendants contend that the plaintiff was an administrative employee within the meaning of 29 C.F.R. § 541.2 because his position was directly related to the management policies and general business operations of BIC, and he exercised a great deal of discretion and independent judgment in such things as deciding which informants to interrogate, what elements of an investigation to pursue, what questions to ask, what records to search, and how to follow up on a record search. They assert that this work was done with only general supervision. Defendants further contend that the plaintiff was a professional employee within the meaning of 29 C.F.R. § 541.3 because his position required creativity, imagination, and talent, and because it was predominantly intellectual in character.

 The plaintiff responds that he was not an administrative employee because his position was not directly related to the management policies or general business operations of BIC, nor did he regularly exercise discretion and independent judgment within the meaning of 29 C.F.R. § 541.2. Plaintiff further responds that he was not a professional employee because his position did not require the advanced education required by 29 C.F.R. § 541.3.

 In a motion for summary judgment, the moving party must demonstrate that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In considering a motion for summary judgment, a court must assume the resolution of any issue in favor of the non-movant, and determine whether the movant is entitled to judgment as a matter of law. First Jersey National Bank v. Dome Petroleum, Ltd., 723 F.2d 335 (3d Cir. 1983). See e.g. Hollinger v. Wagner Mining Equipment, 667 F.2d 402, 405 (3d Cir. 1981). The parties' do not dispute the facts, but how the law should be applied to these facts.

 In cases where an employer is claiming that an employee is exempt from the provisions of the FLSA, the burden of establishing an exemption is on the employer. Idaho Sheet Metal Workers, Inc. v. Wirtz, 383 U.S. 190, 206, 15 L. Ed. 2d 694, 86 S. Ct. 737 (1966), reh. den., 383 U.S. 963, 16 L. Ed. 2d 305, 86 S. Ct. 1219 (1966). Furthermore, "these exemptions are to be narrowly construed against the employers seeking to assert them and their application limited to those establishments plainly and unmistakably within their terms and spirit." Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 4 L. Ed. 2d 393, 80 S. Ct. 453 (1960), reh. den., 362 U.S. 945, 4 L. Ed. 2d 772, 80 S. Ct. 803 (1960).

 Title 29 U.S.C.A. § 213(a)(1) provides that employees who can be considered bona fide administrative or professional personnel "as such terms are defined and delimited from time to time by regulations of the Secretary" are exempt from the time and one-half for overtime requirement at 29 U.S.C.A. § 207. The regulations for a bona fide administrative employee are found at 29 C.F.R. § 541.2 (1984), and are interpreted at 29 C.F.R. §§ 541.201 - 541.215 (1984).

  The regulations set forth a "long test" and a "short test" to be used in determining whether the administrative exemption has been met, Hodgson v. Penn Packing Co., 335 F. Supp. 1015, 1020 (E.D.Pa. 1971). Which test applies depends upon the employee's salary. However, under either test both subsections (a) and (b) of § 541.2 must be satisfied. See, Goldstein v. Dabanian, 291 F.2d 208, 210-11 (3d Cir.), cert. denied, 368 U.S. 928, 7 L. Ed. 2d 191, 82 S. Ct. 364 (1961). These subsections provide as follows:

 

The term "employee employed in a bona fide * * * administrative * * * capacity" in section 13(a)(1) of the act shall mean any employee:

 

(a) Whose primary duty consists of:

 

(1) the performance of office or non-manual work directly related to management policies or general business operations of his employer or his employer's customers, . . . and . . .

 

(b) Who customarily and regularly exercises discretion and independent judgment.

 The phrase, "directly related to management policies of his employer or his employer's customers," is interpreted at 29 C.F.R. § 541.205, and "describes those types of activities relating to the administrative operations of a business as distinguished from 'production'." BIC's business is "producing" information for its clients, and the plaintiff's duties consisted almost entirely of gathering that "product". Thus, it appears to the court that the plaintiff was engaged in "production" within the meaning of the regulation.

 The second criteria under either test is that the employee's work regularly requires the exercise of discretion and independent judgment. This regulation is interpreted at 29 C.F.R. § 541.207, which cautions that it is frequently misapplied because the exercise of discretion and independent judgment is confused with "the use of skill in applying techniques, procedures, or specific standards." The defendants maintain that the plaintiff exercised great discretion and independent judgment because there was no set procedure for carrying out his duties. Nonetheless, the defendants admit that an investigator's billable hours are subject to reduction if the investigator's supervisor believes that the work produced was not commensurate with the time spent, or the time spent was considered to be a duplication of effort. Investigators may have exercised limited discretion and independent judgment, but if this exercise did not coincide with their supervisor's idea of the proper procedure the supervisor could reduce their billable hours for the month. A skilled investigator could conceivably avoid these cuts by following procedures with which his supervisor agreed. Under these circumstances, investigators were merely applying their knowledge and skill in determining what procedure to follow, which, as 29 C.F.R. § 541.207 states, is not the exercise of discretion and independent judgment contemplated by the regulation.

 Accordingly, we find as a matter of law that the plaintiff was not a bona fide administrative employee within the meaning of the statute and regulations.

 The next issue is whether the plaintiff was a bona fide professional employee within the meaning of 29 C.F.R. § 541.3. For an employer to establish that an employee falls within this exemption, he must show that the employee's duties meet each of the criteria in the regulation. See, Brennan v. Western Union Tel. Co., 561 F.2d 477 (3d Cir. 1977), cert. denied, Western Union Tel. Co. v. Marshall, 434 U.S. 1063, 55 L. Ed. 2d 764, 98 S. Ct. 1237 (1978).

 Section 541.3 provides in relevant part:

 

The term "employee employed in a bona fide * * * professional capacity" in section 13(a)(1) of the act shall mean any employee:

 

(a) Whose primary duty consists of the performance of:

 

(1) Work requiring knowledge of an advance type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and from an apprenticeship, and from training in the performance of routine mental, manual, or physical processes, or

 

(2) Work that is original and creative in character in a recognized field of artistic endeavor (as opposed to work which can be produced by a person endowed with general manual or intellectual ability and training), and the result of which depends primarily on the invention, imagination, or talent of the employee. . . .

 As indicated above, the defendants admit that the position of investigator requires no specialized instruction or study. Thus, plaintiff's duties did not meet this criteria. Although defendants have attempted to fit the plaintiff's job under alternative (2) of 29 C.F.R. § 541.3(a) by characterizing his duties as requiring creativity, imagination, and talent, the regulation makes it clear that this alternative only applies to a "recognized field of artistic endeavor," 29 C.F.R. § 541.3(a)(2), including such fields as "music, writing, the theater, and the plastic and graphic arts." 29 C.F.R. § 541.303(b). There is no indication from the facts, nor do the parties allege, that the plaintiff's duties included such work.

 Accordingly, we hold as a matter of law that the plaintiff was not a bona fide professional employee within the meaning of the statute and regulations.

 II. Wrongful Discharge

 Defendants contend that where there is a statutory remedy that protects the aggrieved employee, an action for wrongful discharge in violation of public policy cannot be maintained. Wehr v. Burroughs Corp., 438 F. Supp. 1052 (E.D.Pa. 1977). Since the public policy alleged to have been violated was the non-payment of overtime under the FLSA, defendants argue that plaintiff's sole remedy is under that statute.

 The plaintiff responds that summary judgment is improper at this time because he may not have a statutory remedy against the individual defendants, and, thus, summary judgment on this action may deprive him at any remedy against them. He asserts that the availability of a statutory remedy depends upon whether the individual defendants can be considered to be "employers" within the meaning of the FLSA or the Pennsylvania Minimum Wage Act of 1968, and that this determination has not yet been made.

 A cause of action for wrongful discharge in violation of public policy cannot be maintained when there is a statutory remedy available to the plaintiff. Novosel v. Nationwide Ins. Co., 721 F.2d 894, 898 (3d Cir. 1983), citing, Bruffett v. Warner Communications Inc., 692 F.2d 910, 919 (3d Cir. 1982). Both the FLSA and the Pennsylvania Minimum Wage Act of 1968 provide a remedy for an employee who was not paid overtime wages as those acts require. 29 U.S.C.A. § 216(b); 43 Pa.C.S.A. § 333.113 (1968). These remedies are available against "employers".

 BIC is beyond dispute an employer in this case, and, thus, no cause of action based upon a violation of public policy can be maintained as to it. However, there is a genuine issue of material fact concerning whether the individual defendants are considered employers under the relevant acts. Consequently, we will grant defendants' motion for summary judgment on the plaintiff's wrongful discharge claim only with respect to BIC.

 III. Remaining Issues

 The plaintiff seeks summary judgment upon the issue of whether the defendant BIC was engaged in interstate commerce. This issue has been rendered moot by stipulation of the parties.

 The plaintiff also seeks summary judgment upon the issue of whether the defendants can raise the affirmative defense of good faith, as set forth at 29 U.S.C.A. § 260 (1965), to avoid paying liquidated damages under 29 U.S.C.A. § 216(b) (1965). The defendants have not raised this defense in their pleadings, and therefore the plaintiff is seeking, through his motion for summary judgment, an advisory opinion which this court is not empowered to make. Flast v Cohen, 392 U.S. 83, 96, 20 L. Ed. 2d 947, 88 S. Ct. 1942 (1968). Accordingly, the plaintiff's motion is denied on this issue.

 An appropriate order will follow.

 ORDER of COURT

 AND NOW, this 31st day of July, 1985, in accordance with the memorandum opinion filed this date in the above-captioned matter, IT IS ORDERED that the plaintiff's motion for summary judgment be, and the same hereby is, granted to the extent that there are no genuine issues of fact and that as a matter of law the plaintiff was not employed in an administrative or a professional capacity by the defendants; and,

 IT IS FURTHER ORDERED that defendants' motion for summary judgment be, and the same hereby is, granted with respect to the plaintiff's wrongful discharge claim against defendant, Business Information Company and denied in all other respects.

19850731

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