Medrano v. Flowers Food, Inc. et al

REPLY to Response to Motion re MOTION for Summary Judgment

D.N.M.February 22, 2019

1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO PAUL MEDRANO, on his own behalf and on behalf of all others similarly situated, Plaintiff, vs. FLOWERS FOODS, INC., and FLOWERS BAKING CO. OF EL PASO, LLC, Defendants. § § § § § § § § § § § § CASE NO. 1:16-CV-00350-KBM-KK DEFENDANTS’ REPLY IN SUPPORT OF THEIR OMNIBUS MOTION FOR SUMMARY JUDGMENT AS TO VARIOUS DEFENSES TO PLAINTIFFS’ CLAIMS Plaintiffs devote their Opposition to Defendant’s Motion for Summary judgment to deflecting and outright ignoring their own sworn testimony. From Plaintiff Julio Covarrubias’ admission that 100% of his work day is devoted to sales, to Plaintiff Joe Chavez’s admissions that sales were the “name of the game” and he was “constantly” trying to get his customers to buy more product, to their collective admission in their Response that Defendant’s success is “dependent on the success of the distributors in selling product” (Doc. 171 at 7), Plaintiffs confirm their primary duty was sales. The Court should, therefore, grant Defendants’ motion. I. UNDISPUTED RELEVANT FACTS A. Plaintiffs Do Not Dispute Several Key Facts Which Support the Application of the Outside Sales Exemption Plaintiffs’ Statement of Facts does not purport to controvert several critical facts from Defendants’ Statement of Facts (“DSOF”): ¶¶ 21, 22, 29, 39, 40, 41, 48 and 52. These facts are, therefore, undisputed. Fed. R. Civ. P. 56(e)(2); D.N.M. L.R. 56.1(b). Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 1 of 19 2 B. Defendants’ Responses and Objections to Plaintiffs’ Statements of Fact The vast majority of the 89 additional “facts” Plaintiffs included in their Statement of Facts (“PSOF”) are immaterial and irrelevant to the question of whether Plaintiffs would be exempt from overtime under the outside sales exemption to the FLSA if they were to be deemed “employees” rather than independent contractors.1 Moreover, in many instances, PSOF do not controvert the DSOFs they claim to dispute. Response to PSOF ¶ 1: Disputed. Mr. Madrid testified that as a sales manager, his job duties were to “pass along knowledge or information, sales information, to distributors,” to “assist them in any way that [he] can,” to give distributors “any help that they need,” to “communicate with store managers” and finally, to “try to gain sales through any way necessary, any means necessary.” Doc. 171-1 at 14:4-11. When he was asked to explain what he meant when he said “gain sales through any means necessary,” Mr. Madrid clarified he meant “making sure [Distributors] have the proper amount of inventory,” and that he would let Distributors know if their shelves needed “a little bit more product” to “see if they had anything available.” Id. at 14:12- 17. Defendants further note this statement does not controvert DSOF ¶¶ 2, 10, 42, 43 or 44. Response to PSOF ¶¶ 2-5: Defendants object to these statements because they are irrelevant and immaterial.2 Defendants further object to these statements because they are not supported by the factual record. The time period at issue for Plaintiffs’ FLSA claims is, at most, April 23, 2013 through the present See Docs. 1, 43. However, Mr. Havens left his employment with Defendant 1 While Defendants do not concede Plaintiffs were improperly classified as independent contractors rather than as employees, neither party has moved for summary judgment as to the independent contractor classification issue. 2 Wherever Defendants object to statements as “irrelevant and immaterial,” Defendants intends the objection to reflect that Defendants believe these statements as irrelevant and immaterial to the defense at issue in Defendants’ Motion for Summary Judgment—i.e. whether Plaintiffs would be exempt from overtime under the outside sales exemption to the FLSA if they were to be deemed “employees” rather than independent contractors. See, generally, Doc. 159. However, for purposes of brevity, Defendants have abbreviated their full objection to the immateriality and irrelevance within the text of their responses to Plaintiffs’ Statements of Fact ¶¶ 6-8, 24-51, 54-57, 60-66, 68-70, and 72-87. Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 2 of 19 3 FBC El Paso in 2006, and he admits he has no knowledge of how the company has run the Distributor program since he left the company. Ex. A-1, Havens Dep. at 138:3-10, 139:20-140:13. Consequently, Mr. Havens’ cited testimony has no relevance to, the time period at issue for Plaintiffs’ FLSA claims. Response to PSOF ¶¶ 6-8: Defendants object to these statements as irrelevant and immaterial. Even if these statements were relevant, they do not controvert DSOF ¶¶ 2, 20, 42, 43 or 44. Response to PSOF ¶¶ 9-11: Disputed in part. Defendants dispute these statements to the extent Plaintiffs intend to imply ASDs—rather than Distributors—were primarily responsible for ordering product and making sales to customers serviced by Distributors, and dispute these statements controvert DSOF ¶¶ 2, 20, 42, 43 or 44. Undisputed as to the statement in PSOF ¶ 9 that Area Sales Directors (“ASDs”) were eligible for a bonus if they met certain sales targets, however, Mr. Baldwin testified the best thing ASDs could do to meet their sales targets was to “work with their independent distributors in each territory that they’re assigned, and continue to help them achieve top-line sales growth.” Ex. A-2, Baldwin Dep. at 98:25-99:7. Undisputed as to the statement in PSOF ¶ 10 that ASDs had sales goals, however, Mr. Baxley testified he would only be expected to suggest “proper ordering” techniques to Distributors who were struggling with their ordering, if the Distributors chose to accept the help. Doc. 171-6 at 240:18-241:1. Undisputed as to Mr. Baxley testifying he attended meetings where he received training about how to talk to store managers about selling product in the stores. However, Mr. Baxley also testified the company’s success is dependent on the Distributors’ success in selling products to the stores. Id. at 48:17-24. 3 All deposition excerpts are attached to the Declaration of Katherine K. Paulus, filed herewith as Exhibit A. Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 3 of 19 4 Response to PSOF ¶¶ 12-14: Undisputed.4 Response to PSOF ¶¶ 15, 22: Disputed in part. Undisputed as to the statement in PSOF ¶ 15 that Defendant Flowers Foods, Inc. or its subsidiaries have agreements with certain chain stores referred to as “Direct Store Delivery Agreements” or “DSD” Agreements, and to the statement in PSOF ¶ 22 that these DSD Agreements may include requirements regarding the days of service. Disputed to the extent Plaintiffs imply or state these DSD agreements dictated the amount of product to be ordered or delivered to individual Distributors’ store locations. Mr. Del Campo testified those agreements may define days of service and initial shelf space only “to an extent,” Doc. 171-8 at 80:3-8. Mr. Del Campo also testified that Distributors may negotiate with store managers to the store’s product schematic “due to the distributor’s insight.” Ex. A-3, Del Campo Dep. at 80:9-20. This type of negotiation happens “a lot.” Id. Equally importantly, Plaintiffs themselves agreed their customers were not under any obligation to purchase a specific amount of products from them (see DSOF ¶ 11); Plaintiffs were responsible for determining the amount of products to order for the customers they serviced (see DSOF ¶ 12); they considered numerous factors when creating and placing those orders such as sales trends, upcoming promotions or the demographics of the customers in the store (see DSOF ¶¶ 14-16), and they recommended or requested displays or endcaps from their customers to shelve additional products (see DSOF ¶¶ 33-37, 39). Response to PSOF ¶¶ 16, 17: Undisputed as to the facts that Distributors do not participate in discussions involving the DSD agreement terms, and that if Distributors failed to meet the service requirements in their contract with Flowers, they could (if they failed to correct those issues after 4 Notably, however, Plaintiffs do not contest the sworn testimony of Plaintiff Covarrubias, who testified that 100% of his work time, including loading his truck and stocking shelves, was devoted to sales. DSOF ¶ 10. Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 4 of 19 5 being notified of them) eventually face termination of their Distributor contract. However, neither statement controverts DSOF ¶¶ 2, 11, 12, 19, 27, 46 or 47. Response to PSOF ¶ 18: Disputed in part. Defendants dispute this statement to the extent Plaintiffs are referring to “quantity of products.” Mr. Santos’ testimony only referred to store managers changing the requirement that their stores be serviced a certain number of days per week. See Doc. 171-3 at 83:8-84:9. Mr. Santos also testified store managers may change schematics or may agree with Distributors to not fully fill or deviate from a schematic, that Distributors have control over how much bread they deliver to stores even in the presence of schematics, and Distributors can work with store managers regarding any schematics in their stores. See Doc. 159- 1, p. 91-92 at 25:23-26:17, 27:10-28:2, 28:3-19. Response to PSOF ¶ 19: Disputed in part. While Mr. Baldwin testified a schematic may provide a minimum number of product “facings” within the store, he also testified a Distributor can work with local store management on reducing the number of facings in the schematic if the Distributor feels it is necessary. See Doc. 159-1 p. 5 at 77:17-25. Undisputed that Mr. Madrid testified a Distributor does not have discretion to change a plan-o-gram or schematic unilaterally, however, disputed to the extent Plaintiffs imply a schematic cannot be changed. Mr. Madrid’s testimony does not speak to the discretion a store manager has to deviate from the schematic. See also Ex. A-3, Del Campo Dep. at 80:9-20; Doc. 159-1, p. 92 at 27:10-28:19. Response to PSOF ¶ 20: Disputed. Plaintiff Medrano testified he would attempt to sell more product to his grocery store customers by convincing store managers to allow him to set an end cap of products (see DSOF ¶ 34), and his efforts as a Distributor contributed to the increase in sales of products at his Albertson’s customer account (see DSOF ¶ 52). Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 5 of 19 6 Response to PSOF ¶ 21: Disputed. Plaintiff Medrano testified he strived to ensure his customers trusted him, and in attempting to build good relationships with his customers, he would vary his approach based on their personalities (see DSOF ¶¶ 23, 25). Plaintiff Medrano also testified he would attempt to sell more product to his grocery store customers by convincing store managers to let him set up an end cap of products (see DSOF ¶ 34), and his efforts as a Distributor contributed to the increase in sales at his Albertson’s customer account (see DSOF ¶ 52). Response to PSOF ¶ 23: Defendants object to this statement because Mr. Havens’ testimony has no relevance to the time period at issue for Plaintiffs’ FLSA claims. See Ex. A-1, Havens Dep. at 138:3-10, 139:20-140:1. Mr. Havens admits he has no knowledge of how the company has run the Distributor program since he left his employment with the company in 2006. Id. Response to PSOF ¶¶ 24-36: Defendants object to these statements of fact as irrelevant and immaterial. Whether a temporary employee performs some of the functions of a distributor is irrelevant to what a distributor’s primary duty may be. Additionally, there is no dispute that temporary employees have no incentive to seek additional shelf space to maximize sales or call on new potential customers. See Ex. A-4, Sosa Dep. at 214:17-23. Response to PSOF ¶¶ 37-39, 49, 51: Defendants object to these statements because they are irrelevant and immaterial, and because are not supported by the factual record. Mr. Havens’ testimony has no relevance to the time period at issue for Plaintiffs’ FLSA claims. See Ex. A-1, Havens Dep. at 138:3-10, 139:20-140:1. Finally, even if these statements were relevant and/or supported by the factual record, they do not controvert DSOF ¶¶ 19, 42, 43, 44 or 45. Response to PSOF ¶¶ 40-48, 50: Defendants object to these statements of fact as irrelevant and immaterial. Nor do these statements controvert DSOF ¶¶ 2, 19, 42, 43, 44 or 45. Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 6 of 19 7 Response to PSOF ¶ 52: Disputed in part. Disputed to the extent Plaintiffs imply Mr. Baxley was solely responsible for ensuring customers’ stores looked good, or that product be delivered by a certain time. Mr. Baxley’s cited testimony in support of PSOF ¶ 52 states that “making sure the store looked good” was important to protecting FBC of El Paso’s business, and the distributor’s business with the store. See Doc. 171-6 at 101:4-21. Response to PSOF ¶ 53: Disputed in part. Undisputed Mr. Baxley testified he regularly visits stores to meet with store management and ensure they are satisfied with their service, and that during these visits he checks the product shelves and may straighten up items if needed. Disputed to the extent Plaintiffs intend to imply Mr. Baxley is solely responsible for resolving store managers’ concerns, maintaining good customer relationships, or ensuring products are neatly displayed in the store. Mr. Baxley testified he conveys any management complaints he receives to the Distributor responsible for that store, and it is up to the Distributor to resolve them. Doc. 171- 6 at 62:18-25. Additionally, the Plaintiffs themselves testified they were responsible for creating and maintaining good relationships with their customers (see DSOF ¶¶ 23-26), and they also provided good customer service by ensuring their designated shelf space was full of product, monitoring and removing products outside of freshness standards, and timely responding to any store manager concerns (see DSOF ¶¶ 21, 22, 28). Response to PSOF ¶¶ 54-57: Defendants object to these statements as irrelevant. Even if these statements were relevant, they do not controvert DSOF ¶¶ 5, 6, 7, 8, 9, 53, 54, 55, 56. Response to PSOF ¶ 58: Defendants object to this statement because it is not supported by the factual record. Mr. Havens’ testimony has no relevance to the time period at issue for Plaintiffs’ FLSA claims. See Ex. A-1, Havens Dep. at 138:3-10, 139:20-140:1. Response to PSOF ¶ 59: Defendants object to this statement of fact as irrelevant and immaterial. Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 7 of 19 8 Response to PSOF ¶¶ 60-62: Defendants object to these statements as irrelevant and immaterial. Even if these statements were relevant, they do not controvert DSOF ¶ 32. Response to PSOF ¶¶ 63-66, 68-70, 75: Defendants object to these statements as irrelevant and immaterial. Nor do they do not controvert DSOF ¶¶ 2, 4, 5, 23, 24, 25, 26, 33, 35, 36, 42 or 43. Response to PSOF ¶ 67: Disputed in part. Undisputed that Plaintiff J. Chavez’s testified he was required to bring a FBC manager when attempting to negotiate with and obtain new non-chain accounts on approximately 10 occasions, and that he was ultimately unsuccessful in his attempts to obtain new non-chain accounts. Disputed to the extent this statement implies other Plaintiffs were similarly unsuccessful in their attempts to obtain new accounts. See DSOF ¶ 50. Response to PSOF ¶ 71: Disputed in part. Undisputed as to the statement that Distributors did not decide the pricing of products they delivered to large, chain-store accounts. Disputed as to the statement that Distributors did not decide which products to deliver. Mr. Baxley’s cited testimony relates only to products that are included in their customers’ schematic or modular. See Doc. 171- 6 at 92:3-13. Plaintiffs testified they were responsible for preparing product orders for their customers, which included the amounts of products they would deliver (see DSOF ¶ 12-16), and they also made recommendations to their customers regarding new or different products or mixes of products (see DSOF ¶ 38). Finally, this statement does not controvert DSOF ¶¶ 2, 4, 5, 23-26, 33, 35, 36, 42 or 43. Response to PSOF ¶ 72: Disputed in part. Defendants also object to this statement as irrelevant and immaterial. Even if this statement were relevant, it does not controvert DSOF ¶¶ 2, 4, 5, 23, 24, 25, 26, 33, 35, 36, 42 or 43. Finally, Defendants dispute the statement that Plaintiffs did not have the right to determine how much bread they would sell to stores. Plaintiffs admit they were responsible for preparing the order for products for their customer accounts, and they considered Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 8 of 19 9 several factors in preparing those orders such as sales trends, promotional changes, holidays and the demographics of typical shoppers at these customer accounts. See DSOF ¶¶ 12, 14-16. Response to PSOF ¶¶ 73, 74: Defendants object to these statements as irrelevant. Defendants further object to these statements because they are not supported by the factual record. Mr. Havens’ has not worked for Flowers since 2006. See Ex. A-1, Havens Dep. at 138:3-10, 139:20-140:1. Response to PSOF ¶ 76: Disputed in part. Undisputed that on a “pay by scan” account, such as Wal-Mart, the Distributor receives credit for sales based on goods that are scanned through the register versus goods that are dropped off at a retailer’s back door and the Distributor has no ability to determine the price Wal-Mart charges for that product. Disputed to the extent this statement implies FBC of El Paso does not get paid for that product unless it is purchased by an end consumer, as Distributors actually purchase the product from FBC of El Paso when they accept their orders at the warehouse. See Ex. A-5, Santos Dep. at 30:6-9. Further disputed to the extent this statement implies Plaintiffs will not receive any payment on any products which are delivered to Wal-Mart accounts but not ultimately purchased by a Wal-Mart customer. Because Plaintiffs owns those products, they can be removed from Wal-Mart and delivered to other accounts— including a thrift store—to be sold, among other things. See id. at 30:16-24, 31:5-10; Ex. A-6, C. Chavez Dep. at 41:11-22, 42:19-25. Response to PSOF ¶ 77: Disputed in part. Plaintiffs testified they were able to increase their income as Distributors by selling more products. See DSOF ¶¶ 7, 8. Defendants also object to this statement as irrelevant and immaterial. Defendants further note that even if this statement were relevant, it does not controvert DSOF ¶¶ 2, 3-8, 23-27, 30, 31, 33-36, 42, 43, 55 or 56. Response to PSOF ¶ 78: Defendants object to this statement as irrelevant. Even if this statement were relevant, it does not controvert DSOF ¶¶ 2, 3-8, 23-27, 30, 31, 33-36, 42, 43, 55 or 56. Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 9 of 19 10 Response to PSOF ¶¶ 79-81, 82-84: Defendants object to these statements as irrelevant and immaterial. Even if PSOF ¶¶ 79-81 were relevant, they do not controvert DSOF ¶¶ 42 and 43. Even if PSOF ¶¶ 82-84 were relevant, they similarly fail to controvert DSOF ¶¶ 2, 3, 9 or 50. Response to PSOF ¶¶ 85-87: Defendants object to these statements as irrelevant and immaterial. Defendants further object to PSOF ¶ 87 because it is not supported by the factual record. Mr. Havens’ left Flowers employment in 2006. See Ex. A-1, Havens Dep. at 138:3-10, 139:20-140:1. Response to PSOF ¶ 88: Disputed in part to the extent Plaintiffs imply Distributors only place displays in their customers’ locations in compliance with marketing program requirements. Mr. C’DeBaca testified it is the stores that ultimately decide whether to allow Distributors to place product displays in their locations. See Doc. 171-9 at 154:6-14. And numerous Plaintiffs testified they personally asked managers in their customers’ store locations whether they could place displays based on their own initiative to maximize sales. See DSOF ¶ 35. Response to PSOF ¶ 89: Disputed. While Mr. Baxley may have testified he “did not know anything about” the use of the term “commission” to describe the Distributors’ compensation, Plaintiff Medrano admitted his compensation as a Distributor was based upon the difference between the amount he paid for product, and the amount for which he sold the product to their customers, less their business expenses. See DSOF ¶ 5. II. ARGUMENT AND AUTHORITIES A. Plaintiffs’ Primary Duty Was Making Sales In their response to Defendants’ Motion for Summary Judgment, Plaintiffs claim making sales was not their primary duty for three reasons. First, Plaintiffs assert they do not actually consummate sales. Second, Plaintiffs argue they “do not actually obtain orders or commitments, but simply make products available for sale,” because of the existence of DSD Agreements or planograms/schematics for some of their large, national chain accounts. Finally, Plaintiffs assert Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 10 of 19 11 making sales were not their primary duty because “their days are filled primarily with loading, unloading, and delivering product; stocking shelves and rotating product; and pulling out-of-date product—not with selling bread.” See Doc. 171 at 20-21. Each claim is belied by the law and Plaintiffs’ own sworn admissions. Plaintiffs Consummated Sales For Purposes of Section 3(K) of the FLSA. Plaintiffs’ argument that they do not “make sales” is premised entirely on the false notion that sales to “pay- by-scan” accounts do not constitute the distributor’s own sales because the products are not paid for until that product is purchased5 (“scanned” through the register) by the end customer. But this ignores both the record and the blackletter law. It ignores the record because Plaintiffs have multiple types of customers, including those who purchase the products outright on credit and those who pay cash for products. See, e.g., DSOF ¶ 4. And it ignores the law because even if Plaintiffs had only pay-by-scan accounts, they would still be exempt under the FLSA. Section 203(k) of the FLSA defines ‘[s]ale’ or ‘sell’ to include “any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition” (emphasis supplied). That is precisely what occurs here. On pay-by-scan accounts, Plaintiffs order and purchase product from FBC El Paso (see DSOF ¶ 4, Defendants’ Response to PSOF ¶ 76); deliver those products to their customer accounts (DSOF ¶ 18) receive credit for sales based on goods that are scanned through the register versus goods that are dropped off at a retailer’s back door (PSOF ¶ 76); and remove all product from the 5 Plaintiffs also erroneously assert in their brief that Distributors “do not receive any compensation for the product until it is sold by the store—that is, until a consumer takes the loaf of bread to the sales counter and pays for it.” Doc. 171 at 20. While Defendants do not dispute that Plaintiffs are not paid for products on pay-by-scan accounts until product is purchased, even Plaintiffs do not claim all of their customers were pay-by-scan. Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 11 of 19 12 store which has not sold and is beyond its freshness code6 (DSOF ¶ 22). This precisely aligns with the definition of “consignment” in Section 3(k) of the FLSA. A “consignment” need not involve transfer of title and specifically contemplates that those goods not sold will return to the consignee. Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 158 (2012) (defining “consignment” in section 3(k) to include transactions in which title does not pass). See also id. at 162 (“sale” under FLSA includes “transactions that might not be considered sales in a technical sense”). Indeed, in Christopher, the Supreme Court found that pharmaceutical sales reps, who do not sell their products to end consumers (patients), were nevertheless involved in “sales,” because Section 3(k) does not require “that “a ‘sale’ for the purposes of the outside sales exemption [include] a consummated transaction directly involving the employee for whom the exemption is sought.” Id. at 159. Here, Plaintiffs consignment of goods they own for sale to end customers plainly qualifies as a “sale” under Section 3(k) for purposes of the outside sales exemption. Id. at 162. See also Encino Motorcars, LLC, v. Navarro, 138 S.Ct. 1134, 1142 (2018)(citing Christopher and rejecting principle that FLSA exemptions must be construed narrowly). Planograms, Schematics and DSD Agreements Neither Negate Plaintiffs’ Ability to Make Commitments for Sales Nor Dictate the Amount of Products Plaintiffs Sold. Plaintiffs next assert they “do not obtain orders or commitments, but simply make products available for sale” because they are merely “fulfilling the terms of a contract arranged between Doc. 171 at 23; see also PSOF ¶¶ 15-18. In support of this argument, Plaintiffs assert that “neither [they] nor the store managers have authority to change these agreements.” See id. But this claim is not supported by any citation 6 Plaintiffs also assert—without citation to the factual record—that “any product on the shelf past its code date is removed by the distributor and returned to the warehouse, because it has not sold.” Doc. 171 at 20. This assertion is not supported by the record, see Defendant’s Response to PSOF ¶ 76, but, because the definition of “sale” under the FLSA includes consignments, neither is it relevant. Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 12 of 19 13 to the record for good reason—the record shows the opposite is true. First, Plaintiffs selectively quote from the deposition of Mr. Del Campo, who testified DSD Agreements may define days of service and shelf space only “to an extent,” as their sole support for the notion that the amount of product Plaintiffs deliver to their customers is static and prescribed. But, as noted in Defendants’ Response to PSOF ¶¶ 15, 22, supra at 4, Mr. Del Campo explained that while delivery times and initial shelf space may be referenced in a DSD, the Distributor and a store manager may negotiate to change these conditions, and they do so “a lot.” Id. Notably, Plaintiffs agree with this testimony. Supra at 4. They admit their customers are under no obligation to buy a certain amount of products from them (DSOF ¶ 11),7 and they—as Distributors—determine the quantity of products their accounts need by regularly making changes to the suggested orders. See DSOF ¶¶ 11, 12, 14-16. They admit that sales are the “name of the game,” that they seek to increase the amount of product they sell to their customers (DSOF ¶ 10) and that they can, and do, grow their sales by convincing their customers to buy more (DSOF ¶¶ 38-41).8 In the words of one Plaintiff, “we are in sales,” and it is “our job” to try to sell new products. See DSOF ¶ 38. This is precisely the type of work the Department of Labor characterizes as exempt outside sales, even if an initial sale was made by another person. 29 C.F.R. § 541.504(c)(4) (drivers who call on existing customers and persuade them to accept deliver of more products exempt, even if initial sale made by another). For these reasons, Plaintiffs’ attempts to distinguish the facts of this matter from those described in Meza v. Intelligent Mexican Mktg., 720 F.3d 577, 577-87 (5th Cir. 2013), fail. In Meza, the plaintiff was a route sales employee for a food and beverage company, who was required to stock products according to a planogram. Id. at 579. Importantly, the court determined the 7 While a DSD may provide for an initial amount of shelf space, it is not a requirements contract. As Plaintiffs admit, customers remain free to restrict or eliminate the Flowers products they carry. 8 Plaintiffs do not even purport to controvert these statements. Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 13 of 19 14 plaintiff in Meza was an exempt outside salesman despite the fact that he had to follow planograms for the products he sold, in part because he could negotiate for additional shelf space and recommend new products. Id. at 579. Defendants respectfully request the Court make a similar determination here. Distributors’ Product Delivery and Merchandising Job Responsibilities are Performed in Connection With Their Own Sales. In their own statements of fact, Plaintiffs acknowledge FBC El Paso’s success was “dependent on the success of the distributors in selling product.” PSOF ¶ 12 (emphasis supplied). Despite this candid acknowledgment, Plaintiffs also attempt to argue “making sales” was not their primary duty because their days were “filled primarily with loading, unloading, and delivering product; stocking shelves and rotating product; and pulling out-of-date product.” Doc. 171 at 20-21. Of course, where—as here—Plaintiffs consummate their own sales, all other activities performed incidental to and in conjunction with those sales—such as delivering products, and merchandising—are also considered exempt outside sales work. See 29 C.F.R. § 541.504(a) (time spent “loading, driving, or delivering products” is also considered exempt outside sales work when performed in connection with the employee’s own sales); see also 29 C.F.R. § 541.500(b) (work performed “incidental to and in conjunction with the employee’s own outside sales . . . shall be regarded as exempt outside sales work.”). Plaintiffs themselves admit this, acknowledging that all of their working time is spent engaged in sales-related activities, see n. 3, supra, and they are “in sales” (DSOF ¶ 38).9 9 Plaintiffs’ assertion that they operate under direct supervision from the ASDs (see Doc. 171 at 28) is not supported by the factual record. Plaintiffs point to fact that ASDs testified they visited stores and would inform Distributors of any problems they observed during these visits (PSOF ¶¶ 47, 53) as purported evidence of “direct supervision,” yet Plaintiffs’ own testimony reflects ASDs rarely—if ever—rode along with them while they were making deliveries, and that ASDs did not tell Plaintiffs when to start or finish their work days or when to take breaks. Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 14 of 19 15 B. Plaintiffs Can be Distinguished from the Examples of Non-Exempt Delivery Drivers in the Regulations Despite the extensive factual record regarding Plaintiffs’ efforts to increase sales of products to their customer accounts, Plaintiffs bizarrely attempt to argue their work as Distributors is “nearly akin” to stocking a vending machine—which is one of the enumerated examples of non- exempt delivery drivers in the regulations. See 29 C.F.R. § 541.504(d)(1). But stocking products in a vending machine bears no resemblance to the work Plaintiffs performed as Distributors, who admit they attempted to increase their sales, made recommendations to store managers about product placement, sought additional shelf space, recommended new products, and even offered free samples of products to induce more sales. See e.g. DSOF ¶¶ 30, 33, 34, 38, 40. Plaintiffs further argue their job responsibilities can be likened to those of the exemplar driver in Section 541.504(d)(2). Defendants acknowledge Plaintiffs, as owners of a specific distribution territory, do indeed “call[ ] on established customers day after day or week after week.” The similarities stop there, and any attempts to draw further comparisons between the Plaintiffs in this matter and the exemplar driver in Section 541.504(d)(2) are belied by the Plaintiffs’ own testimony.10 Plaintiffs admit the efforts they made to increase sales—especially their efforts in soliciting and securing the placement of special product displays—were typically effective in increasing the sales of Flowers’ products to their customers. DSOF ¶¶ 52-56. In light of these facts, it is clear Plaintiffs do not simply “deliver a quantity of products” from sales which were “not significantly affected” by their solicitation efforts, or on which the “amount of the sale is determined by the volume of the customer's sales since the previous 10 Plaintiffs testified extensively regarding their sales efforts as Distributors such as their: cultivation of good relationships with the store managers at their customer account locations, recommendation and placement of special displays of product at their customers’ locations, and importantly, their preparation of orders of product to sell and deliver to their customers. DSOF ¶¶ 10-12, 14-16, 21-29, 30, 33-41, 52-56. Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 15 of 19 16 delivery.” 29 C.F.R. § 541.504(d)(2). In other words, the deliveries Plaintiffs make to their customers are always from sales they affected by way of their solicitation and sales-increasing efforts, efforts which they engage in “constantly” (DSOF ¶ 33). Accordingly, and as more fully described in Defendants’ Motion for Summary Judgment (Doc. 159), Plaintiffs are comparable to the examples of drivers who fall under the outside sales. See 29 C.F.R. §§ 541.504(c)(1), 541.504(c)(4). C. Plaintiff Medrano Is Not a Covered Employee Under the NMMWA In opposing Defendants’ Motion for Summary Judgment as to Plaintiff Medrano’s individual NMMWA claims under the exemption set forth in Section 50-4-21(C), Plaintiffs point to testimony from ASD David Baxley regarding Distributor compensation in which he says he “does not know anything about a commission.” See PSOF ¶ 89. However, to qualify for exemption under the NMMWA the compensation model “need not use the word ‘commission.’” Corman v. JWS of New Mexico, Inc., --F.Supp.3d--, 2018 WL 598164, at *25 (D.N.M. Nov. 14, 2018). Here, Distributors are compensated for each product they sell based on the difference between their purchase price and the price they sell the product for. Their revenue, therefore, is represented by a component of the final sale price to the customer, a model essentially identical to a traditional “commission.” See Doc. 159 at 30 (noting definition of commission is “percentage of the money received from a total paid”). Plaintiffs offer no other distinction between their compensation model, and the type of commission-like payment contemplated by the NMMWA, perhaps because there is none. They are plainly exempt. Next, Plaintiffs strangely assert that they are not paid on a commission basis because, they claim, they were not “in control” of the amount they made. See Doc. 171 at 33. But this is both unsupported by the record and irrelevant. Plaintiffs admit that they increased their income by increasing their sales. DSOF ¶¶ 7, 8, 38, 52, 54-56. In other words, they “controlled” the amount Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 16 of 19 17 of compensation they received. But whether the Plaintiffs could control their amount of sales or not (and they admittedly do), does not change the nature of how they are compensated: they receive a percentage of the final sale represented by the difference between their cost and the cost of the product to their customer. In short, the undisputed material facts regarding the structure of Plaintiff Medrano’s compensation as a Distributor reflect that he was essentially paid on a commission basis and is, therefore, exempt under Section 50-4-21(C) of the NMMWA. D. Plaintiff Carroll’s FLSA Claims are Time-Barred Plaintiffs do not dispute DSOF ¶¶ 57 or 58 regarding the dates Plaintiff Carroll ended his Distributor relationship and filed his consent to join this lawsuit. Instead, Plaintiffs vaguely assert Plaintiff Carroll’s FLSA claims should be tolled, but provide no support for the application of equitable tolling to his claims. They argue that unless putative plaintiffs’ individual statutes of limitation are “tolled following the filing of the suit, Defendants like FBC would be able to limit a class simply by dragging their feet on approval of the form of notice.” Doc. 171 at 34. But Plaintiffs’ argument makes no sense in light of the date Plaintiff Carroll joined this matter relative to the date the Plaintiffs moved for conditional certification, or the date the Court granted conditional certification and the issuance of notice. See DSOF ¶ 58, Docs 26, 43. Plaintiff Carroll learned of this matter without the benefit of notice being issued; he joined the lawsuit on October 3, 2016—three days prior to the October 6, 2016 date Plaintiffs filed their Motion for Conditional Certification, and nine months prior to the Court’s July 3, 2017 Order granting conditional certification and issuing notice. See id. Plaintiffs have not pointed to any actions on the part of Defendants that caused a delay in Plaintiff Carroll’s ability to join this lawsuit. Defendants are entitled to summary judgment as to Plaintiff Carroll’s untimely FLSA claims. Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 17 of 19 18 III. CONCLUSION Plaintiffs struggle mightily, but unsuccessfully, against the weight of their own admissions that their primary duty was sales. Defendants request that the Court grant summary judgment. Respectfully submitted, By: /s/ Katherine K. Paulus Patrick F. Hulla, (admitted pro hac vice) Chris R. Pace Katherine K. Paulus Carol A. Krstulic OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C. 4520 Main Street, Suite 400 Kansas City, MO 64111 Telephone: 816.471.1301 Facsimile: 816.471.1303 katherine.paulus@ogletree.com patrick.hulla@ogletree.com chris.pace@ogletree.com carol.krstulic@ogletree.com Amelia M. Willis, NM Bar No. 144042 OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C. One Ninety One Peachtree Tower 191 Peachtree St. NE, Suite 4800 Atlanta, GA 30303 Telephone: 404.881.1300 Facsimile: 404.870.1732 amie.willis@ogletree.com Margaret Hanrahan Benjamin Holland OGLETREE DEAKINS NASH SMOAK & STEWART, PC 201 South College Street Suite 2300 Charlotte, NC 28244 Telephone: 704.342.2588 Facsimile: 704.342.4379 margaret.hanrahan@ogletree.com benjamin.holland@ogletree.com R. Nelson Franse RODEY, DICKASON, SLOAN, AKIN & ROBB, P.A. 201 Third Street NW, Suite 2200 (87103) P.O. Box 1888 Albuquerque, NM 87103 Telephone: 505.765.5900 Facsimile: 505.768.7395 Nfranse@rodey.com ATTORNEYS FOR DEFENDANTS FLOWERS FOODS, INC., AND FLOWERS BAKING CO. OF EL PASO, LLC Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 18 of 19 19 CERTIFICATE OF SERVICE I hereby certify that on this 22nd day of February, 2019, the foregoing document was electronically transmitted to the Clerk’s Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Jerry Todd Wertheim Samuel C. Wolf Jenny Faye Kaufman JONES, SNEAD, WERTHEIM & CLIFFORD, P.A. 1800 Old Pecos Trail Santa Fe, NM 87505 Telephone: 505.982.0011 Facsimile: 505.989.6288 todd@thejonesfirm.com sam@thejonesfirm.com jenny@thejonesfirm.com ATTORNEYS FOR PLAINTIFFS /s/ Katherine K. Paulus ATTORNEY FOR DEFENDANTS • • • 37442998.1 Case 1:16-cv-00350-JCH-KK Document 177 Filed 02/22/19 Page 19 of 19