Bothell v. Phase Metrics, Inc.

• Decision Date: 13 August 2002
• Docket Number: No. 01-15474.,01-15474.
• Citation: 299 F.3d 1120
• Parties: Rex L. BOTHELL, Plaintiff-Appellant, v. PHASE METRICS, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

299 F.3d 1120

Rex L. BOTHELL, Plaintiff-Appellant, v. PHASE METRICS, INC., Defendant-Appellee.

No. 01-15474.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 17, 2002.

Filed August 13, 2002.

COPYRIGHT MATERIAL OMITTED

Michael M. Herrick, Herrick Law Offices, San Francisco, CA, for the plaintiff-appellant.

Melinda S. Reichert, Stephen M. Kociol, and M. Emily Osborne, Brobeck, Phleger & Harrison, Palo Alto, CA, for the defendant-appellee.

Appeal from the United States District Court for the Northern District of California; Claudia Wilken, United States District Judge, Presiding. D.C. No. CV-99-01279-CW.

Before: HUG and BERZON, Circuit Judges, and LASNIK,^* District Judge.

OPINION

LASNIK, District Judge.

Rex Bothell seeks overtime compensation for hours worked in excess of forty per week and other damages under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., and California state law. Appellee Phase Metrics, Inc., argues that Bothell is an exempt "administrative" employee under both federal and state law and is therefore not entitled to overtime payments.

Just before trial, the district court ordered the parties to submit additional briefing in support of their respective positions. After reviewing the submissions, the Court found that Bothell's "primary duty consisted of the performance of non-manual work, directly related to the management policies or general business operations of his employer and his employer's customers" and which "required the exercise of discretion and independent judgment." The district court concluded that (a) Bothell was an administrative employee who was not entitled to overtime wages or liquidated damages, (b) similarities between federal and state law precluded a finding that Phase Metrics' failure to pay wages was "willful" under state law, and (c) Bothell's state law claim for overtime wages was governed by the analysis set forth in the regulations implementing the FLSA. Summary judgment was granted in favor of Phase Metrics on all claims.

Bothell filed a timely notice of appeal on March 12, 2001. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we reverse.

FACTS

Phase Metrics, Inc., designs, manufactures, and sells robotic test and inspection equipment for the data storage industry. Bothell began installing, troubleshooting, and maintaining Phase Metrics' products as an hourly, non-exempt, contract employee hired through a third party. On or about November 11, 1997, Phase Metrics offered Bothell a position as a field service engineer working directly for Phase Metrics. Although Bothell's work activities remained the same, the position with Phase Metrics was salaried and he was considered exempt from the overtime wage provisions. Bothell was employed by Phase Metrics for approximately one year from November 1997 to November 1998.

Phase Metrics assigned Bothell as a field service engineer for one of its largest clients, Max Media, Inc., a manufacturer of disk drives. In that capacity, Bothell spent the majority of his time at the Max Media facility, coming to the Phase Metrics office two or three times a week to do paperwork, meet with his supervisors, review new products, and/or pick up supplies. Although the parties agree that Bothell was Phase Metrics' main contact with Max Media, they fundamentally disagree regarding the nature of Bothell's daily activities.

Phase Metrics argues that Bothell was the company representative to Max Media and independently managed the Max Media customer account. In support, Phase Metrics has offered a job description for the field service engineer position, the declarations of various Phase Metrics employees, the declaration of a former Max Media employee, and a selection of Bothell's activity records and time cards. These sources, although not entirely consistent with each other, generally portray Bothell as an "account manager" who performed his job independently, made or recommended "decisions critical to both Phase Metrics and Max Media," and supervised the manual tasks of installation, repair, and maintenance.¹

Bothell's testimony regarding his daily work activities creates an entirely different impression. During his deposition, Bothell was asked to review and comment on the job description for the field service engineer position, which reads:

BS, BA, ME, EE, preferred but not required. 3-5 years experience in installing, maintaining, and troubleshooting complex electromechanical and computer controlled systems. Requires the ability to independently manage a customer account, appropriately manage and staff for installations, upgrades, improvements, and supply appropriate reports and statistical data to home office on the performance level of both machines and personnel.

Requires strong communication and writing skills, must provide technical supervision of 2-6 people. Must independently manage the customer support services for at least one customer.

Must be responsible for billing and collecting of all purchase orders and making all warranty decisions. Must be able to teach operations and maintenance classes to customers' staff engineers, technicians, and operators. Must have a formal regularly scheduled meeting with customer and provide issues list status.

Bothell testified that his job was to install, troubleshoot, and maintain Phase Metrics' products at Max Media's facility and that the other portions of the above job description did not accurately reflect the day-to-day reality of the work he performed. Specifically, Bothell testified that, although he had "3-5 years experience" and was Phase Metrics' main point of contact with Max Media, he did not independently manage a customer account, compile or produce statistical data, evaluate the performance of machines or people, supervise other employees, have authority to make repair or warranty determinations of any significance, participate in billing, teach classes, control his own schedule, or have regularly scheduled meetings with Max Media representatives.

According to Bothell, his primary duties were to keep Phase Metrics' equipment in good working order and to act as a conduit for information between his employer and its customer. Bothell testified that, over a fifty-two week period, he worked with crews to install ten machines, each of which took approximately two weeks: installations, including the paperwork and customer contacts directly associated with those installations, took up approximately 40% of his time. In addition, Bothell spent additional time troubleshooting and maintaining the existing machines. The remainder of his time was spent responding to customer calls, learning about systems and procedures, and completing the paperwork required by Phase Metrics. Any authority a field service engineer might have had in theory was severely curtailed in practice because the supervisor expected to be kept informed of all but the most trivial happenings, Bothell was never given final decision-making authority for any specific dollar limit, and all parts were stored at the home office and could be obtained only through the supervisor.

STANDARD OF REVIEW

Whether Bothell's activities as a field service engineer excluded him from the overtime benefits of the FLSA is a question of law and the court reviews the district court's decision de novo. Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 714, 106 S.Ct. 1527, 89 L.Ed.2d 739 (1986). How Bothell spent his working time is a question of fact reviewed under the clearly erroneous standard. Bratt v. County of Los Angeles, 912 F.2d 1066, 1068 (9th Cir.1990), cert. denied, 498 U.S. 1086, 111 S.Ct. 962, 112 L.Ed.2d 1049 (1991); O'Dell v. Alyeska Pipeline Serv. Co., 856 F.2d 1452, 1453 (9th Cir.1988). Because Bothell is appealing a summary judgment against him, we view the evidence under the same standard used by the district court and must determine whether, viewing the evidence in the light most favorable to Bothell, there are any genuine issues of material fact. Webster v. Public Sch. Employees of Wash., Inc., 247 F.3d 910, 912 n. 1, 913 (9th Cir.2001).

DISCUSSION

I. FLSA Claims

The FLSA requires that employers ordinarily pay their employees time and one-half for work exceeding forty hours per week. 29 U.S.C. § 207(a)(1). The Act provides an exemption from overtime for persons "employed in a bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213(a)(1). An "employer who claims an exemption from the FLSA has the burden of showing that the exemption applies." Donovan v. Nekton, Inc., 703 F.2d 1148, 1151 (9th Cir.1983). Because the FLSA "is to be liberally construed to apply to the furthest reaches consistent with Congressional direction... FLSA exemptions are to be narrowly construed against ... employers and are to be withheld except as to persons plainly and unmistakenly within their terms and spirit." Klem v. County of Santa Clara, 208 F.3d 1085, 1089 (9th Cir.2000) (internal quotation marks and citations omitted).

The regulations applicable to this case are described as the "short test" and define an "employee employed in a bona fide ... administrative ... capacity" as any employee:

(a) who is compensated on a "salary basis" at a rate of at least $250 per week; and

(b) whose "primary duty consists of ... [t]he performance of office or nonmanual work directly related to management policies or general business operations of his employer or his employer's customers;" and

(c) whose duties include work "requiring the exercise of discretion and independent judgment."

29 C.F.R. § 541.2. "The criteria provided by regulations are absolute and the employer must prove that any particular employee meets every requirement before the employee will be deprived of the protection of the Act." Mitchell v. Williams, 420 F.2d 67, 69 (8th Cir.1969). Thus, Phase Metrics must prove that Bothell meets all of the requirements in this regulation before he can be...