Ketner v. Branch Banking & Trust Co.

Citation143 F.Supp.3d 370
Decision Date29 October 2015
Docket NumberNo. 1:14–cv–967.,1:14–cv–967.
Parties R. Andrew KETNER and Stephen Baker, individually and on behalf of all other similarly situated individuals, Plaintiffs, v. BRANCH BANKING AND TRUST COMPANY, Defendant.
CourtU.S. District Court — Middle District of North Carolina

Brittany B. Skemp, Rachhana T. Srey, Nichols Kaster, PLLP, Minneapolis, MN, Shane Thomas Stutts, Robert Akin Brinson, Roberson Haworth & Reese, P.L.L.C., High Point, NC, for Plaintiff.

Jill S. Stricklin, Constangy Brooks & Smith, LLC, Winston–Salem, NC, Maureen R. Knight, Constangy, Brooks & Smith, LLP, Fairfax, VA, for Defendant.

MEMORANDUM OPINION AND ORDER

LORETTA C. BIGGS

, District Judge.

Plaintiffs, R. Andrew Ketner ("Ketner") and Stephen Baker ("Baker"), bring this putative collective action,1 individually and on behalf of similarly situated individuals, against their former employer, Defendant Branch Banking and Trust Company ("BB & T"), for damages and declaratory relief, alleging violations of The Fair Labor Standards Act, 29 U.S.C. §§ 201

–219 (2012) ("FLSA" or "Act"). Before the Court is BB & T's Partial Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (ECF No. 16.) The Court heard oral argument on this motion on September 3, 2015. For the reasons that follow, the Court denies BB & T's motion.

I. BACKGROUND
A. The Fair Labor Standards Act

Congress enacted FLSA in 1938 to ensure that the nation's workers received "a fair day's pay for a fair day's work." A.H. Phillips, Inc. v. Walling, 324 U.S. 490, 493, 65 S.Ct. 807, 89 L.Ed. 1095 (1945)

; see Barrentine v. Ark.-Best Freight Sys., Inc., 450 U.S. 728, 739, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981) (noting that Congress sought to "protect all covered workers from substandard wages and oppressive working hours"). Though it has been amended over the years, "FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees that cannot be modified by contract," Genesis Healthcare Corp. v. Symczyk, ––– U.S. ––––, 133 S.Ct. 1523, 1527, 185 L.Ed.2d 636 (2013). The Act requires that employers pay their employees at least the federal minimum wage and provide them overtime in the amount of one and one-half times their regular rate of pay for each hour worked beyond forty hours in a given work week. 29 U.S.C. §§ 206(a)(1), 207(a)(1). FLSA, however, provides for a number of exemptions to this general rule. See id. § 213. One type of exemption involves employees who work "in a bona fide executive, administrative, or professional capacity." Id. § 213(a)(1). These exemptions are commonly known as the "white collar exemptions," and such employees are exempt from FLSA's minimum wage and overtime compensation requirements. See id. While the Act does not define the terms "executive," "administrative," or "professional," Congress has granted the Secretary of the Department of Labor ("DOL") broad authority to define the scope of the white collar exemptions. See Auer v. Robbins, 519 U.S. 452, 456, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997) (quoting 29 U.S.C. § 213(a)(1) ). DOL has promulgated regulations defining these terms and the scope of these exemptions. See 29 C.F.R. §§ 541.0 –541.710 (2015).

In determining whether an employee qualifies for a white collar exemption, "job title[s] alone [are] insufficient." Id. § 541.2

. Rather, employees must satisfy certain tests related to their job duties and salary as set forth in the regulations. Id. In general, the job duties test is satisfied if an employee's primary duty is the performance of exempt work. See id.§ 541.700(a)

; see also id. §§ 541.100(a)(2), .200(a)(2), .300(a)(2). For each of the white collar exemptions, the regulations specify what job duties qualify for exemption. See §§ 541.100(a)(2), .200(a)(2), .300(a)(2). Under the salary-basis test, employees must be paid on a salary-basis of at least $455 per week. Id. §§ 541.600(a), 602(a). With some exceptions, this test is satisfied if an employee "regularly receives each pay period ... a predetermined amount constituting all or part of the employee's compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed" or based on the "operating requirements of the business." Id. § 541.602(a). "An actual practice of making improper deductions demonstrates that the employer did not intend to pay employees on a salary basis." Id. § 541.603(a). The exemption status of an employee "is a matter of affirmative defense on which the employer has the burden of proof." Clark v. J.M. Benson Co., 789 F.2d 282, 286 (4th Cir.1986) (quoting Corning Glass Works v. Brennan, 417 U.S. 188, 196–97, 94 S.Ct. 2223, 41 L.Ed.2d 1 (1974) ). The burden of proof is high, as the employer must prove "by clear and convincing evidence" that the exemption applies, and such exemptions are to be narrowly construed against the employer. Desmond v. PNGI Charles Town Gaming, L.L.C., 564 F.3d 688, 691–92 (4th Cir.2009).

B. Plaintiffs' Complaint2

BB & T is a North Carolina-based company that provides financial services to its customers in several states throughout the country. (ECF No. 1 ¶¶ 4, 6.) BB & T employs, among others, recent college and MBA graduates who must, as a condition of employment, participate in BB & T's Leadership Development Program ("LDP" or "training program") and execute a Training Cost Agreement ("TCA"). (Id. ¶¶ 12–13, 20; see ECF No. 1–2.) The training program is six to ten months in duration and is offered by BB & T twice per year. (ECF No. 1 ¶¶ 12, 15.) The TCA requires that LDP participants repay the training costs associated with the LDP if they resign or are terminated for cause within five years of their first day of employment as an associate with BB & T. (ECF No. 1–2.) BB & T forgives 1/60th of the training costs for each full month worked by the associate. (Id. ) BB & T has valued the training costs at $46,000 per LDP participant. (Id. )

In July 2012, after signing the TCA, Ketner and Baker entered the LDP. (ECF No. 1 ¶¶ 17–18, 22.) Like other LDP participants, Plaintiffs were paid by the hour as non-exempt employees. (Id. ¶ 19.) Ketner's annual salary was $46,000 and Baker's salary was $100,000. (Id. ¶¶ 7–8.) During the training program, Plaintiffs attended classes, took examinations, and participated in training events. (Id. ¶ 23.) In November 2012, Ketner, while still in the training program, was placed in a "Business Process and Project Improvement Analyst" position at BB & T. (Id. ¶ 29.) On March 8, 2013, Plaintiffs and their classmates from the July 2012 class graduated from the training program, (id. ¶ 30), and BB & T changed their classification from non-exempt employees to exempt employees, (id. ¶¶ 34–35). Baker was assigned the position of "Research & Strategy Specialist I." (Id. ¶ 33.) Ketner, however, continued to work as a "Business Process and Project Improvement Analyst." (Id. ¶ 32.) On August 12, 2013, Ketner resigned from his position at BB & T, and Baker resigned about a year later. (Id. ¶ 37.) Following their resignations, BB & T notified Plaintiffs that it intended to enforce the TCA and retained a law firm to collect the outstanding balance for the training costs associated with the LDP. (Id. ¶¶ 38–39.) The law firm sent Ketner and Baker demand letters, stating that legal action would be taken against them if they did not repay the balance remaining on the training costs under the TCA. (Id. ¶ 39; ECF No. 1–3 at 1–2.) The letters demanded $35,982.92 from Ketner and $27,600.00 from Baker. (ECF No. 1–3 at 1–2.) Although Plaintiffs have not repaid any portion of the training costs demanded, BB & T has collected payments from at least two other graduates of the LDP who left BB & T within five years, (ECF No. 1 ¶¶ 42–43).

On November 17, 2014, Plaintiffs filed this action, asserting four claims against BB & T: (1) Count I alleges that BB & T failed to pay them for overtime hours worked during the LDP even though they were classified as non-exempt; (2) Count II alleges that BB & T misclassified them as exempt employees following their graduation from the LDP; (3) Count III alleges that BB & T failed to pay Ketner and other similarly situated individuals the minimum wage as required by FLSA; and (4) Count IV requests that the court enter a declaratory judgment that the TCA is unenforceable against Plaintiffs and other LDP graduates. (ECF No. 1 ¶¶ 47–74.) BB & T moves to dismiss Counts II, III, and IV of Plaintiffs' Complaint for failure to state a claim upon which relief can be granted under Rule 12(b)(6) of the Federal Rules of Civil Procedure

. (ECF No. 16 at 1–2.)

II. STANDARD OF REVIEW

The purpose of a motion made under Rule 12(b)(6) of the Federal Rules of Civil Procedure

"is to test the sufficiency of a complaint." Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir.1999). A complaint may fail to state a claim upon which relief can be granted in two ways: first, by failing to state a valid legal cause of action, i.e., a cognizable claim, see Holloway v. Pagan River Dockside Seafood, Inc., 669 F.3d 448, 452 (4th Cir.2012) ; or second, by failing to allege sufficient facts to support a legal cause of action, see Painter's Mill Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir.2013). A dismissal under Rule 12(b)(6) is appropriate only when the complaint "lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Capital Associated Indus., Inc. v. Cooper, 129 F.Supp.3d 281, 300, 2015 WL 5178057, at *13 (M.D.N.C.2015) (quoting Brown v. Target, Inc., No. ELH–14–00950, 2015 WL 2452617, at *8 (D.Md. May 20, 2015) ).

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Although a plaintiff need...

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