Donovan v. Carls Drug Co., Inc.

• Decision Date: 22 March 1983
• Docket Number: D,No. 905,905
• Citation: 703 F.2d 650
• Parties: 26 Wage & Hour Cas. (BN 86 Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Appellee, v. CARLS DRUG COMPANY, INC., Carl A. Panasci, Individually and Officially, and Ernest M. Pelli, Individually and Officially, Appellants. ocket 82-6270.
• Court: U.S. Court of Appeals — Second Circuit

Page 650

703 F.2d 650

26 Wage & Hour Cas. (BN 86

Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Appellee, v. CARLS DRUG COMPANY, INC., Carl A. Panasci, Individually and Officially, and Ernest M. Pelli, Individually and Officially, Appellants.

No. 905, Docket 82-6270.

United States Court of Appeals Second Circuit.

Argued Feb. 16, 1983.

Decided Feb. 22, 1983.

Filed March 22, 1983.

Vincent J. Rossi, Jr., Utica, N.Y. (Richard O.C. Kehoe, Kehoe & Murane, Utica, N.Y.), for appellants.

Barbara E. Kahl, Dept. of Labor, Washington, D.C. (Manuel Del Valle, Dept. of Labor, New York City), for appellee.

Before OAKES, and NEWMAN, Circuit Judges, and TENNEY, District Judge. ^*

OAKES, Circuit Judge:

The Secretary filed suit against Carls Drug Company, Inc. (Carls) in May of 1980, alleging, inter alia, violations of the Fair Labor Standards Act, 29 U.S.C. Secs. 201-219 (1976) & Supp. V 1981), by Carls' overtime pay policies for its pharmacist employees. Notice was served and an answer filed. In May of 1981, the Secretary filed a Request for Admission of Facts under Federal Rule of Civil Procedure 36(a). These issues are deemed admitted unless a response or objection is filed within thirty days after service of the request, though not sooner than forty-five days after service of the summons and complaint. Carls failed to respond to the request or otherwise to defend in this action until December of 1981 when the Secretary moved for summary judgment pursuant to Federal Rule of Civil Procedure 56(a). Carls then filed a motion to permit late filing of a response to the Request for Admission, as well as affidavits and exhibits opposing the motion for summary judgment. This appeal is taken from the decision and order of the United States District Court for the Northern District of New York, Howard G. Munson, Chief Judge, denying defendants' motion for relief from default admissions and granting the Secretary of Labor's motion for partial summary judgment and, thereby, injunctive relief sought by the Secretary.

1. Admission. Carls has plainly made Rule 36(a) admissions. These may be used for Rule 56 summary judgment. Moosman v. Joseph P. Blitz, Inc., 358 F.2d 686, 688 (2 Cir.1966); United States v. Natale, 99 F.Supp. 102, 103 (D.C.Conn.1950); San Lorenzo Nursery Co. v. Western Carloading Co., Inc., 91 F.Supp. 553, 555 (S.D.N.Y.1950). Under Rule 36(b), the decision to excuse the defendant from its admissions is in the court's discretion. "[T]he court may permit withdrawal [of admissions] when the presentation of the merits of the action will be subserved thereby and the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice him in maintaining his action or defense on the merits." Fed.R.Civ.P. 36(b) (emphasis added). Thus, the court has the power to make exceptions to the Rule only when (1) the presentation of the merits will be aided and (2) no prejudice to the party obtaining the admission will result. Because the language of the Rule is permissive, the court is not required to make an exception to Rule 36 even if both the merits and prejudice issues cut in favor of the party seeking exception to the rule. See Moosman, supra, 358 F.2d at 688. Vesting such power in the district court is essential for Rule 36 admissions effectively to narrow issues and speed the resolution of claims. See Developments in the Law--Discovery, 74 Harv.L.Rev. 940, 969-70 (1961).

2. Work Records. It should be sufficient that Carls has admitted that it is an employer subject to FLSA and has failed to pay its pharmacists the overtime pay clearly due to them. Our confidence in the district court's decision to rely on the admissions is reinforced by examination of Carls' work records because these suggest that Carls would not have improved its "presentation of the merits of the action" had it been released from its admissions. Furthermore, the work records could form an independent basis for denying Carls' claim to the "professional employee" exception.

Carls has the burden to show that its workers fall into an FLSA exception. Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 456, 4 L.Ed.2d 393 (1960). Pharmacists paid an hourly rate and not a salary are not "professional employees" exempt from FLSA under 29 C.F.R. Sec. 541.3(e). Usery v. Associated Drugs, Inc., 538 F.2d 1191, 1194 (5th Cir.1976); Retail Store Emp. Union, Loc. 400 v. Drug Fair Community Drug Co., 307 F.Supp. 473, 478 (D.D.C.1969). Carls' payroll data clearly show that pharmacists were paid according to an hourly rate and that this hourly amount was the amount deducted for each hour of work missed. A salaried professional employee may not be docked pay for fractions of a day of work missed. Wage Hour Administrator's Opinion Letter, Dec. 7, 1966, Lab.L.Rep. (CCH) p 30,543 (November 1966--March 1969). Carls' pharmacists worked a 41.5 hour week. Divided by either a five ( = 8.3) or six ( = 6.9) day work week, Carls' figures, which include numerous irregular deductions, cannot be squared with the regulation. At best, Carls' work records are subject to the tortured interpretation that the two co-pharmacists at each store divided their days irregularly and that this produced the uneven pay scales. Such a rationalization falls far short of...