Hurt v. Commerce Energy, Inc.
| Decision Date | 31 August 2020 |
| Docket Number | No. 18-4058,18-4058 |
| Citation | 973 F.3d 509 |
| Parties | Davina HURT and Dominic Hill, individually and on behalf of all others similarly situated, Plaintiffs-Appellees, v. COMMERCE ENERGY, INC., doing business as Just Energy doing business as Commerce Energy of Ohio, Inc.; Just Energy Marketing Corp. ; Just Energy Group, Inc., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Sixth Circuit |
The Fair Labor Standards Act provides minimum wage and overtime protections to a broad range of employees. Davina Hurt and Dominic Hill brought claims for themselves and others alleging that their positions are covered by the protections of the FLSA and parallel provisions of Ohio law. They challenge their designation by Defendants as "outside salesman," a category that is "exempt" from the FLSA, which means that their position is not covered by the protections of the Act. A trial was held and the jury found that Plaintiffs were not exempt outside salespeople. Just Energy appeals that determination and challenges pre- and post-trial rulings made by the district court, certain instructions given to the jury, and evidentiary rulings made by the court. For the reasons explained below, we AFFIRM .
Plaintiffs worked for a group of affiliated energy supply companies that provide electric power and natural gas to residential and commercial customers in the United States and internationally, collectively referred to as Just Energy. Just Energy operates in the U.S. through licensed subsidiaries and is the parent company of a number of businesses, including Defendants Commerce Energy, Inc. and Just Energy Marketing Corp. Commerce Energy, Inc. is the licensed subsidiary in Ohio, California, Georgia, Maryland, Massachusetts, New Jersey, and Pennsylvania, and Just Energy Marketing Corp. hired Plaintiffs to go door-to-door to solicit customers on behalf of Commerce Energy.
Plaintiffs worked as door-to-door solicitors and spent most of their working hours in the field seeking to convince customers to buy electricity and natural gas products. Just Energy paid them exclusively on a commission basis without paying overtime or minimum wage, and the actual hours and pay for each worker varied. Plaintiffs were not required to have any sales experience or level of education; they were required only to go through an orientation and a sales training course. Plaintiffs also signed Just Energy's independent contractor agreements (the "Agreement") that set out confidentiality, non-disparagement, non-exclusive, and non-compete clauses.
Plaintiffs were typically required to attend daily morning meetings at Just Energy's facility before going into the field. They were driven to the field in teams led by Just Energy supervisors; any work breaks were controlled by those supervisors. The Agreement states that there are no minimum number of hours or minimum number of contracts that must be solicited. Some Plaintiffs testified they were required to work on specific days and hours, and would be reprimanded if they did not work as specified. Plaintiffs could not choose where they worked; they were directed to certain neighborhoods by the supervisors and given maps with highlighted streets showing where they were required to work for the day.
When in the field, Plaintiffs were mandated to adhere to a dress code, including wearing a shirt that properly and prominently displays the company's name and logo, and were subject to rules set out in a contractor compliance matrix, which lists the feedback potential customers might give about their interactions with the workers and the disciplinary consequences for such feedback. For their solicitation, Plaintiffs were instructed to follow a script verbatim. When a potential customer became interested in Just Energy's products, Plaintiffs filled out a "customer agreement" and obtained the customer's signature. Some Plaintiffs referred to this as an "application"; it was non-binding and did not finalize the transaction.
Plaintiffs were directed to place a verification call from the customer's premises for a third party to confirm that the customer entered into the agreement voluntarily and with full understanding of its terms. Plaintiffs had to initiate the call to the third-party verifier using the customer's telephone and were required to leave the premises before the customer spoke to the verifier. Plaintiffs were not allowed to return or speak to the customer after the call. This was an important requisite of the job: the compliance matrix reserves the most severe consequence of termination for a solicitor who remains present at the consumer's premise during the verification call, uses his or her cell phone to conduct the call, or returns to the customer's premises within seven days after the call. The Ohio Public Utilities Commission (PUCO) requires procedures for door-to-door energy solicitors, including independent third-party verification for 50% of customers, but the universal verification process for Just Energy's customers was required as part of a 2010 settlement agreement between the company and PUCO.
The sale was not final after the third-party verification call. Instead, the customers went through a credit check, and after that, Just Energy could approve the application and finalize the sale or choose to reject the application. The signed customer agreement specifies that the contract is conditional upon Just Energy's acceptance, at its sole discretion. Just Energy had "unfettered discretion to reject any energy contract submitted" by Plaintiffs. Some applications were rejected for failed credit checks, but Plaintiffs frequently were not told why applications were rejected and their commissions not paid. Plaintiffs had no role in Just Energy's decision-making, and because their contact with the customer ended after they had to leave the premises, they were not allowed to engage in customer service or address any customer concerns—customers were instructed to call a separate customer service line with any questions. Trial testimony indicates that Just Energy exercised its discretion to reject applications frequently. Though a satisfactory third-party verification call and a successful credit check were essential, ultimately approval depended on the exercise of discretion by Just Energy and was required before an application generated by Plaintiffs became final and they could receive and retain their commission.
Plaintiffs submitted documentary evidence of compensation for members of the class. Exhibits in the record include two spreadsheets that summarize the total compensation of Plaintiffs who worked varying lengths of time between 2010 and 2014. Of the 3,840 total individuals with compensation data available in the spreadsheets, 214 made no money at all. 69% of the individuals made under $1,000 in total compensation and 62% of the individuals made under $500.
Individual plaintiffs testified to their earnings. One made only $1,200 over three or four months, while another made only $196 while working 12- to 14-hour days, six to seven days a week for about two months. Other plaintiffs earned nothing—one never received a commission even after working six to seven days a week for at least a month and turning in three to five signed customer agreements to Just Energy every day, and another earned nothing even after working long days for two weeks, knocking on over 100 doors each day. Yet another worked 11-hour days, six days a week for a month, and testified that he "only made enough really to pay for the uniform" and that he "didn't even get any check stubs or anything" from Just Energy.
Plaintiffs filed a complaint in 2012 alleging that Just Energy misclassified its door-to-door solicitors as outside salespeople in order to qualify for an exemption from the Fair Labor Standards Act (FLSA) and the Ohio Minimum Fair Wage Standards Act (OMFWSA). Plaintiffs sought to certify the FLSA claim as a collective action and the OMFWSA claim as a class action. In 2013, the district court granted conditional certification of the FLSA collective action to workers who performed services in the last three years for Commerce Energy, Just Energy's licensed subsidiary operating in Ohio; it granted class certification for the OMFWSA claim to Ohio workers who performed services for Commerce Energy since March 2009. The court denied Just Energy's summary judgment motion, and in September 2014, the case went to a bifurcated jury trial on the question of Just Energy's liability.
Prior to trial, Just Energy filed a motion in limine to exclude evidence of Plaintiff's compensation; the district court denied the motion and admitted compensation evidence over Just Energy's objection. At trial, over Just Energy's objection, the district court instructed the jury on the law governing the outside sales exemption to the wage and hour requirements of the FLSA. The court asked the jury "to consider the extent to which the employee has the authority to bind the company to the transaction at issue" and whether "the employer retains and/or exercises discretion to accept or reject any transactions for reasons that are unrelated to regulatory requirements applicable to the industry."
The jury found Just Energy liable for minimum wage and overtime pay under the FLSA and the OMFWSA on the basis that Plaintiffs were not exempt outside salespeople. The district court denied Just Energy's motions for directed verdict and judgment as a matter of law. Just Energy now challenges the denial of summary judgment, directed verdict, and judgment as a matter of law, as well as the jury instructions and the admission of compensation evidence at trial. Just Energy contends that Plaintiffs were exempt from the FLSA and the OMFWSA under the outside sales exemption as a matter of law.
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