United States District Court, W.D. Pennsylvania
THOMAS E. PEREZ, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, Plaintiff,
DAVISON DESIGN & DEVELOPMENT, INC., a corporation; and GEORGE M. DAVISON, individually and as a Corporate Officer of the aforementioned corporation, Defendants.
NORA BARRY FISCHER, District Judge.
This civil action was commenced on August 1, 2013 by Plaintiff Thomas Perez, Secretary of the United States Department of Labor (hereinafter, the "Secretary") against Defendants Davison Design & Development, Inc. and George M. Davison (collectively, "Davison") pursuant to the Fair Labor Standards Act, 29 U.S.C. §201 et seq. ("FLSA"). The Secretary contends, among other things, that Davison violated §7(a) of the FLSA, 29 U.S.C. §207(a), by failing to pay overtime premiums to approximately 257 of its current and former sales representatives. Davison maintains that it is exempt from the overtime requirement pursuant to an exception applicable to "retail or service establishments." See 29 U.S.C. §207(i).
On December 27, 2013, Davison filed a motion for summary judgment and supporting materials (ECF Nos. 31, 32, 33, 34) based on the claimed exemption. The Secretary filed his submissions in opposition to Davison's motion and in support of his own cross-motion for summary judgment on March 3, 2014 (ECF Nos. 41, 42, 43, 44, 45, 46, 47). The parties subsequently filed their respective materials in reply and/or in opposition to the pending summary judgment motions (ECF No. 51, 52, 53, 54, 55, 57, 58, 59).
On August 20, 2014, this Court entered a Memorandum Opinion (ECF No. 60) and Order (ECF No. 61) denying the parties' cross-motions without prejudice to be reasserted on a more fully developed record. Davison then filed a motion for reconsideration of that ruling (ECF No. 64), which was denied in a Text Order dated October 7, 2014. The Court now issues this Memorandum Opinion in order to explain the reasoning for its October 7, 2014 ruling.
II. Standard of Review
"A motion for reconsideration is a limited vehicle used to correct manifest errors of law or fact or to present newly discovered evidence.'" Jackson v. City of Phila., 535 F.App'x 64, 69 (3d Cir. 2013) ( quoting Max's Seafood Cafe ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir.1999)). A court may grant such a motion if the party seeking reconsideration establishes one of the following: (1) an intervening change in the law; (2) the availability of new evidence; or (3) the need to correct a clear error of law or prevent manifest injustice. Id. ( citing Max's Seafood Cafe, 176 F.3d at 677). "Because of the interest in finality, motions for reconsideration should be granted sparingly; the parties are not free to relitigate issues the court has already decided." Thomas v. Piccione, Civil Action No. 13-425, 2014 WL 1653066, at *1 (W.D. Pa. April 24, 2014) ( citing Rottmund v. Cont'l Assurance Co., 813 F.Supp. 1104, 1107 (E.D. Pa. 1992)). "[A] motion for reconsideration is not properly grounded in a request for a district court to rethink a decision it[ ] has already made, rightly or wrongly.'" Id. ( quoting Williams v. City of Pittsburgh, 32 F.Supp.2d 236, 238 (W.D. Pa. 1998)).
Under §7(a) of the FLSA, employers must generally pay their employees at least one and one-half times their regular pay rate for any time they work in excess of forty hours per week. See 29 U.S.C. §207(a)(1); Parker v. NutriSystem, Inc., 620 F.3d 274, 277 (3d Cir. 2010). However, §7(i) of the Act provides an exception to the overtime mandate for employees who work in "retail or service establishments." This so-called "retail commission exception" provides that:
[n]o employer shall be deemed to have violated subsection (a) of this section by employing any employee of a retail or service establishment for a workweek in excess of the applicable workweek specified therein, if (1) the regular rate of pay of such employee is in excess of one and one-half times the minimum hourly rate applicable to him under section 206 of this title, and (2) more than half his compensation for a representative period (not less than one month) represents commissions on goods or services. In determining the proportion of compensation representing commissions, all earnings resulting from the application of a bona fide commission rate shall be deemed commissions on goods or services without regard to whether the computed commissions exceed the draw or guarantee.
29 U.S.C. § 207(i). See also Parker, 620 F.3d at 277. The central issue in dispute in this case is whether Davison's sales representatives meet the terms of this exemption.
As this Court previously observed, it is the employer's burden to demonstrate "that the employee and/or employer come plainly and unmistakably' within the exemption's terms." Rosano v. Township of Teaneck, 754 F.3d 177, 185 (3d Cir. 2014) ( quoting Lawrence v. City of Philadephia, 527 F.3d 299, 310 (3d Cir. 2008)). Moreover, exemptions to the Act's requirements should be construed narrowly and against the employer. See Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960); Lawrence, 527 F.3d at 310. "[I]f the record is unclear as to some exemption requirement, the employer will be held not to have satisfied its burden.'" Haskins v. VIP Wireless LLC, No. Civ. A. 09-754, 2010 WL 3938255 *4 (W.D. Pa. Oct. 5, 2010) (quoting Martin v. Cooper Elec. Supply Co., 940 F.2d 896, 900 (3d Cir. 1991)) (alteration in the original).
To qualify for the "retail commission exception, " an employer must show that: (1) it is "a retail or service establishment"; (2) the subject employees' regular rate of pay is more than one and one-half times the minimum wage; and (3) more than half of the employees' compensation "represents commissions on the sale of goods or services." 29 U.S.C. §207(i). See also Gieg v. DDR, Inc., 407 F.3d 1038, 1046 (9th Cir. 2005). In its motion for summary judgment, Davison focused only on the first requirement, arguing that it qualified as a "retail or service establishment" within the meaning of the Act. Davison did not initially address the second and third requirements at any length because it believed those elements had been conceded by the Secretary inasmuch as they were not specifically pleaded in the complaint. ( See Defs.' Br. Supp. Mot. Summ. Judg. 1 n.1 and 8, ECF No. 32.)
In response to Davison's motion, the Secretary disputed that Davison qualified as a "retail or service establishment" and denied that any element of the exemption had been conceded. As to elements (2) and (3), the Secretary argued that no waiver of these issues could have resulted from the manner in which the complaint was pleaded because the exemption under §7(i) is in the nature of an affirmative defense as to which Davison bears the burden of proof. The Secretary maintained that, because Davison had failed to offer proof as to the employees' regular rate of pay and/or compensation ...