Marzuq v. Cadete Enters., Inc.

• Decision Date: 09 December 2015
• Docket Number: No. 14–1744.,14–1744.
• Citation: 807 F.3d 431
• Parties: Gassan MARZUQ, et al., Plaintiffs, Appellants, v. CADETE ENTERPRISES, INC., et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

807 F.3d 431

Gassan MARZUQ, et al., Plaintiffs, Appellants,

v.CADETE ENTERPRISES, INC., et al., Defendants, Appellees.

No. 14–1744.

United States Court of Appeals, First Circuit.

Dec. 9, 2015.

Shannon Liss–Riordan, with whom Benjamin J. Weber, Lichten & Liss–Riordan, P.C., and Elayne N. Alanis were on brief, for appellants.

Nicholas B. Carter, with whom Maria T. Davis and Todd & Weld LLP were on brief, for appellees.

Peter Winebrake, Mark J. Gottesfeld, and Winebrake & Santillo, LLC on brief for amici curiae National Employment Law Project, Economic Policy Institute, and National Employment Lawyers Association; Audrey Richardson and Greater Boston Legal Services on brief for amicus curiae Massachusetts Fair Wage Campaign; Catherine Ruckelshaus, Anthony Mischel, National Employment Law Project, Roberta L. Steele, and National Employment Lawyers Association; and Ross Eisenbrey and Economic Policy Institute on brief for Economic Policy Institute.

Before HOWARD, Chief Judge, SOUTER, Associate Justice,^* and LIPEZ, Circuit Judge.

LIPEZ, Circuit Judge.

Two former managers of Dunkin' Donuts stores in Massachusetts brought this action claiming they were improperly denied overtime pay in violation of the Fair Labor Standards Act ("FLSA"). See 29 U.S.C. § 207(a)(1). Based on facts it deemed undisputed, the district court rejected the recommendation of the magistrate judge and granted summary judgment for the defendant employers, finding that plaintiffs were "bona fide executive[s]" excluded from the statute's overtime pay requirement. Id. § 213(a)(1). Our review of the law and the record persuades us that material factual disputes remain concerning the exemption's applicability to plaintiffs and, hence, we vacate the summary judgment and remand for further proceedings.

I.

A. Factual Background

In this appeal from a summary judgment, we present the facts in the light most favorable to the plaintiffs, the nonmoving party. See Ray v. Ropes & Gray LLP, 799 F.3d 99, 112 (1st Cir.2015). Here we provide a brief recital of facts to set the stage for the analysis that follows. We provide additional detail later as part of that analysis.

Plaintiff Gassan Marzuq worked as a manager at a Dunkin' Donuts store in Massachusetts from 2007 until his termination in 2012,¹ and plaintiff Lisa Chantre was a manager at another Massachusetts store from 2009 until her termination in 2010.² Both stores are among multiple Dunkin' Donuts franchises owned and operated by three related corporate entities—Cadete Enterprises, Inc., T.J. Donuts, Inc., and Samoset St. Donuts, Inc.—whose common president is John Cadete.

Pursuant to manager agreements they signed with Cadete Enterprises, Marzuq and Chantre were expected to work "no less than a six day, 48 hour work week." (Emphasis in original.) Often, however, store managers work more than sixty hours, in part because they substitute for crew members who are out sick or miss a shift for other reasons. Marzuq testified in his deposition that his regular schedule added up to sixty-six hours over six days, but that he was in fact "there all the time, seven days a week."³ Managers' responsibilities include calibrating the equipment to Dunkin' Donuts specifications, handling cash, keeping the store and grounds properly maintained, training and supervising the employees, periodic counting of every non-perishable item in the store, and substantial paperwork.

Marzuq and Chantre were supervised by a district manager, Aaron Dermandy, who oversaw at least seven stores during the time plaintiffs were managers. Among other duties, Dermandy determined staffing levels, arranged maintenance, and ordered the baked goods for the stores. He visited each store every week, and was involved in both the hiring and firing of crew members.

Marzuq viewed himself as "in charge" and "the captain" of his store, and his sons, both of whom worked at Marzuq's store, likewise saw him that way. Sarmad Marzuq testified that "[i]t was always expected that if [his father] wasn't around that he would be always on call," and Ahmad Gassan Marzuq reported that no one else was in charge when his father was not at the store: "If anyone had questions, we would just call my father and he usually would come in ... [a]nd solve the problem for us."

The record, however, also contains evidence of Marzuq's difficulty in fulfilling his role as "leader of th[e] team." In addition to reporting that he worked on Sundays because his regular six-day schedule was insufficient to get the necessary work done, Marzuq testified that he "did not have [ ] time actually to be the manager as required to be a manager." He elaborated as follows:

I'm always on the floor 90 percent of my time, serving customers, cleaning, cleaning the outside, doing the landscaping, cleaning the papers out of the bushes, cleaning the bathroom, serving customers, covering shifts, employees that they call in, I have to cover. So really I don't have time to be 100 percent manager.⁴

He explained that he could not routinely delegate the clean-up to crew members "because you're always short on staff." When asked about the company policy that employees take a day off, he responded: "How [are] you going to run ... the operation with no management to take care of that location? So you have to work."

B. Procedural Background

Marzuq and Chantre filed this action in February 2011 seeking overtime compensation under the FLSA,⁵ and the defendants filed a motion for summary judgment two years later that relied heavily on the depositions of Marzuq and Dermandy. In recommending that the motion be denied, the magistrate judge found a genuine issue of material fact as to whether plaintiffs fell within the FLSA's overtime-pay exclusion for employees serving in a "bona fide executive" capacity. 29 U.S.C. § 213(a)(1).

As described more fully below, the district court disagreed that a jury could find in plaintiffs' favor. It concluded that the facts in this case are "in substance indistinguishable" from those we encountered in Donovan v. Burger King Corp., 672 F.2d 221 (1st Cir.1982) ("Burger King "), where we held that certain assistant managers were exempt from the overtime provision. The court thus granted summary judgment for defendants, and this appeal followed.

II.

Before examining the district court's conclusion that Burger King "controls the disposition of plaintiffs' FLSA claims," we review the governing law and the reasoning in Burger King that led us to find the overtime exemption applicable there.

A. The FLSA Executive Exemption

The FLSA requires employers to pay their employees at least "one and one-half times the regular rate" for any hours worked in excess of a forty-hour workweek. 29 U.S.C. § 207(a)(1). The overtime requirement has multiple exceptions. The one at issue in this case excludes "any employee employed in a bona fide executive ... capacity." Id. § 213(a)(1). Pursuant to regulations issued by the Secretary of Labor, an employer seeking to establish that an employee is an exempted "executive" must show: (1) the employee's salary is at least $455 per week, (2) the employee's "primary duty" is management, (3) the employee "customarily and regularly directs the work of two or more other employees," and (4) the employee "has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight." 29 C.F.R. § 541.100(a) (2009).⁶ Each of these requirements must be met for the exemption to apply.

The regulations explicitly address the situation of an employee who concurrently performs exempt and nonexempt work—i.e., one who supervises other employees while also doing non-supervisory tasks along with those subordinates—stating that such an employee may fall within the exemption so long as the four requirements of § 541.100 listed above are otherwise met. See id. § 541.106. Whether an employee who concurrently performs both types of duties meets the requirements is determined on a case-by-case basis. Id. For example, a manager "can supervise employees and serve customers at the same time without losing the exemption." Id. § 541.106(b). Hence, even a substantial overlap in the performance of non-managerial and managerial work will not disqualify an employee from the exemption if the executive duties are his or her "primary duty." Id.

The regulations provide guidance on how to determine an employee's "primary duty," including a set of non-exclusive factors (in boldface below) to consider. See id. § 541.700. Because the primary duty inquiry is central to this case, we reproduce all but the introductory line of the pertinent regulation:

(a) ... The term "primary duty" means the principal, main, major or most important duty that the employee performs. Determination of an employee's primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee's job as a whole. Factors to consider when determining the primary duty of an employee include, but are not limited to, the relative importance of the exempt duties as compared with other types of duties; the amount of time spent performing exempt work; the employee's relative freedom from direct supervision; and the relationship between the employee's salary and the wages paid to other employees for the kind of nonexempt work performed by the employee.

(b) The amount of time spent performing exempt work can be a useful guide in determining whether exempt work is the primary duty of an employee. Thus, employees who spend more than 50 percent of their time performing exempt work will generally satisfy the primary duty requirement. Time alone, however, is not the sole test, and nothing in this section requires that exempt employees spend more than 50 percent of their time performing exempt work. Employees who do not spend more than 50 percent of their time performing exempt duties may

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