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Supreme Court. Christopher v. SmithKline Beecham Sup Ct held (5 to 3) that pharmaceutical sales representatives qualify for the “outside sales” exemption.

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Presentation on theme: "Supreme Court. Christopher v. SmithKline Beecham Sup Ct held (5 to 3) that pharmaceutical sales representatives qualify for the “outside sales” exemption."— Presentation transcript:

1 Supreme Court

2 Christopher v. SmithKline Beecham Sup Ct held (5 to 3) that pharmaceutical sales representatives qualify for the “outside sales” exemption under the Fair Labor Standards Act (“FLSA”) not entitled to overtime pay if they worked more than 40 hours in a week. Power to interpret delegated to DOL

3 Christopher v. SmithKline Beecham DOL Regs (29 CFR § ) state: “[s]ales within the meaning of [§203(k)] include the transfer of title to tangible property.”

4 Christopher v. SmithKline Beecham – Did Reps consummate “sales”? DOL claimed sales rep never consummated a sale. But FLSA Sect. 203(k), provides “ ‘[s]ale’ or ‘sell’ includes any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition [italics added]

5 Christopher v. SmithKline Beecham The Supreme Court found that “DOL’s current interpretation—that a sale demands a transfer of title—is quite unpersuasive.” CT said “Sale” much broader - FLSA defines “sale” to mean, inter alia, a “consignment for sale,” and a “consignment for sale” does not involve the transfer of title.

6 Christopher v. SmithKline Beecham – But Sup Ct went further - Ct said DOL’s interpretation of ambiguous regulations would impose potentially massive liability on respondent for conduct that occurred before that interpretation was announced The DOL first announced its view that pharmaceutical detailers are not exempt outside salesmen in an amicus brief filed in the Second Circuit in 2009

7 Christopher v. SmithKline Beecham – Failure to Act But where, as here, an agency’s announcement of its interpretation is preceded by a very lengthy period of conspicuous inaction, the potential for unfair surprise is acute.

8 Christopher v. SmithKline Beecham Even more important, despite the industry’s decades-long practice of classifying pharmaceutical detailers as exempt employees, the DOL never initiated any enforcement actions with respect to detailers or otherwise suggested that it thought the industry was acting unlawfully

9 Christopher v. Smithkline Beecham Where does this leave the long established concept of deference to Agency Regs? The “unfair surprise” concept and the “failure to prosecute” hypothesis opens up vast areas for challenging DOL regulations. But note – the facts in this case were unusual.

10 Wal-Mart on Remand Allowed California Class Action Despite mandate, District Court (N.D. Cal.) allowed amendment of Wal-Mart class complaint to proceed limited to California employees – some groups like supervisors, pharmacists etc eliminated

11 What was Wal-Mart Mandate from Supreme Court? The Supreme Court did not remand the case for any further class proceedings – only individual named parties Mandate limited to adjudicating the individual claims of the named plaintiffs. Ginsburg stated in dissent that she would reserve the matter of whether Plaintiffs met Rule 23(b)(3) requirements for consideration and decision on remand. Wal-Mart argued that the majority's failure support Ginsberg comment was a rejection of that position.

12 But District Court claims Mandate does not foreclose revisiting class District Court cites 9 th Cir: "According to the rule of mandate, although lower courts are obliged to execute the terms of a mandate, they are free as to anything not foreclosed by the mandate, and, under certain circumstances, an order issued after remand may deviate from the mandate if it is not counter to the spirit of the circuit court's decision."

13 Wal-Mart – But what about Sup Ct holding on “commonality”? Sup Ct held: Plaintiffs failed to identify a "specific employment practice" besides delegated discretion that established a "common mode of exercising discretion that pervade{d] the entire company." Sup Ct rejected Plaintiffs' sociological expert's claim that Wal-Mart had a "strong corporate culture" making it vulnerable to gender bias.

14 Wal-Mart Class – So how did Plaintiffs Avoid the commonality Problem? Plaintiffs now allege all California store managers are required to attend centralized management training – told that the gender disparity in senior management is attributable to men being "more aggressive in achieving those levels of responsibility” – efforts to promote women could lead to the selection of less qualified candidates at a meeting of District Managers, Wal-Mart's CEO made statements that “could be interpreted” as communicating that men had traits that were more likely to make them successful.

15 Wal Mart – More Discovery??? so long as discovery might permit them to meet the Rule 23 obligations clarified by the Supreme Court's ruling, this Court is not prepared to deny them an opportunity to marshal and present evidence in support of their class allegations.

16 Plaintiffs Will have to still contend with FRCP 23(b)(3) (A) …questions of law or fact common to the members of the class predominate over any questions affecting only individual members – policies not individual claims (D) the difficulties likely to be encountered in the management of a class action. – Right of individual hearing of each case

17 Are ADA transfers a reasonable accommodation? In 2003, United Airlines set out Reasonable Accommodation Guidelines stating that "transfer... [to] an equivalent or lower-level vacant position" may be a reasonable accommodation, the guidelines specify that the transfer process is competitive.

18 ADA Transfer – Barnett v. US Airways Sup Ct in Barnett v. US Airways (2002) took middle ground Employer could not make transfer solely on ability to do job Nor did the Court give the Disabled employee unqualified right to transfer Middle Ground: Transfer subject to reasonable accommodation and undue hardship

19 ADA Transfers- United Airlines 7 th Cir United Airlines: No factual setting – policy at issue Sup Ct (2002) Barnett v US Airways involved transfer to mail room by injured employees in violation of seniority rights of other employees.

20 ADA Transfers – 7 th Cir Holding 7 th Cir held that the ADA “does indeed mandate that an employer appoint employees with disabilities to vacant positions for which they are qualified, provided that such accommodations would be ordinarily reasonable and would not present an undue hardship to that employer”

21 ADA Transfers – What is a reasonable accommodation "The plaintiff might show, for example, that the employer, having retained the right to change the seniority system unilaterally, exercises that right fairly frequently, reducing employee expectations that the system will be followed-to the point where one more departure, needed to accommodate an individual with a disability, will not likely make a difference…”

22 ADA Transfers – Practical Issues Documentation efforts at reasonableness Employer may choose which reasonable accommodation to offer to the employee.


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