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Gerald Ibanez v. Abbott Laboratories

November 14, 2011

GERALD IBANEZ, PLAINTIFF,
v.
ABBOTT LABORATORIES, INC., DEFENDANT.



The opinion of the court was delivered by: Jones, II, U.S.D.J.

MEMORANDUM

This is a matter brought under the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. § 201, et seq. (2011), and the Pennsylvania Minimum Wage Act of 1968 ("PMWA"), 43 Pa. Cons. Stat. §§ 333.101-333.115 (2006). Gerald Ibanez (hereinafter "Plaintiff"), a former pharmaceutical representative for Abbott Laboratories, Inc. (hereinafter "Defendant") claims Defendant did not pay him overtime because it mis-classified its representatives as exempt from overtime requirements. Before the Court are Plaintiff's Motion for Summary Judgment (Docket No. 44); Defendant's Motion for Summary Judgment (Docket No. 54); responses and replies thereto; and multiple Notices of Supplemental Authority. The Court held oral argument on July 26, 2011. See Tr. at Docket No. 84. For the reasons set forth herein, the Court will grant the Defendant's Motion and deny the Plaintiff's motion.

Under Fed. R. Civ. P. 56(c), summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a summary judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Fed. R. Civ. P. 56(c). In order to defeat a motion for summary judgment, disputes must be both (1) material, meaning concerning facts that will affect the outcome of the issue under substantive law, and (2) genuine, meaning the evidence must be such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. An issue is genuine if the fact finder could reasonably return a verdict in favor of the non-moving party with respect to that issue. Anderson, 477 U.S. at 248. In reviewing a motion for summary judgment, the court "does not resolve factual disputes or make credibility determinations, and must view facts and inferences in the light most favorable to the party opposing the motion." Seigel Transfer, Inc. v. Carrier Express, Inc., 54 F.3d 1125, 1127 (3d Cir. 1995).

Plaintiff contends that: (1) Defendant is precluded from arguing that Plaintiff is exempt because a Court outside this Circuit has ruled similar plaintiffs are not, and (2) even if Plaintiff is not entitled to judgment based on collateral estoppel, Plaintiff does not fall within the administrative exemption to the FLSA and PWSA. Defendant maintains it is entitled to judgment as a matter of law because: (1) it is not appropriate to apply collateral estoppel, and (2) under Third Circuit precedent, Plaintiff is subject to the administrative exemption and therefore cannot prevail in this action.

FLSA Regulations define an "employee employed in a bona fide administrative capacity" as any employee:

(1) Compensated on a salary or fee basis at a rate of not less than $455 per week.exclusive of board, lodging or other facilities;

(2) Whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers; and

(3) Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

29 C.F.R. § 541.200(a) (2010). Pennsylvania's administrative exemption substantially mirrors the FLSA's requirements. Under Pennsylvania law, an exempt administrative employee (1) is "compensated on a salary or fee basis at a rate of not less than $250 per week," (2) has a "primary duty" that "consists of the performance of office or non-manual work directly related to management policies or general operation of his employer or the customers of the employer," and

(3) has a primary duty that "includes work requiring the exercise of discretion and independent judgment." 34 Pa. Code § 231.83(1), (5) (2011).

The U.S. Court of Appeals for the Third Circuit has twice within the last two years found pharmaceutical sales representatives exempt under the administrative exception. Smith v. Johnson & Johnson, 593 F.3d 280 (3d Cir. 2010); Baum v. AstraZeneca, C.A.3 No. 09-2150, 2010 WL 1063935 (3d Cir. Mar. 24, 2010). The Smith Court found a representative was engaged in work directly related to the management or general business operations of the employer because the "position required her to form a strategic plan designed to maximize sales" and said plan required a "high level of planning and foresight." Smith, 593 F.3d at 285. Soon thereafter, the Baum Court relied on Smith and found a representative's work related to the general business operations of her employer because she "advertis[ed] and market[ed]" pharmaceutical products. Baum, 2010 WL 1063935 at *3.*fn1

These well-reasoned decisions found persuasive authority in caselaw from this and other circuits, as well as the Code of Federal Regulations. Subsequently, a district court within the Third Circuit likewise granted summary judgment to a pharmaceutical company under the FLSA's administrative exemption. Jackson v. Alpharma, Inc., No. 07-3250, 2010 WL 2869530 (D.N.J. July 19, 2010). In Jackson, Judge Brown likened the scenario to that in Smith, in that the plaintiffs: (1) were "involved in planning long- or short-term business objectives related to the marketing of their products within their territories," and (2) exercised discretion and independent judgment with respect to matters of significance because they "decide[d] how best to contact [ ] doctors and move their business." Id. at *1,*4. See also Cote v. Burroughs Wellcome Co., 558 F. Supp. 883, 887 (E.D. Pa. 1982) (holding that pharmaceutical detail person was exempt under the FLSA).

After carefully reviewing the record in this matter, I conclude that the undisputed facts -- which include Plaintiff's own testimony -- are directly analogous to those in Smith, Baum, and Jackson. Specifically, Plaintiff engaged in short- and long-term business planning, including (but not limited to):

* "[U]tiliz[ing] available resources to plan and implement strategies to drive business in [his] territory, including frequent analysis of reports from the home office and the creation of a ...


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