McLaughlin v. Murphy, Civ. CCB-04-767.

• Decision Date: 13 October 2004
• Docket Number: No. Civ. CCB-04-767.,Civ. CCB-04-767.
• Citation: 372 F.Supp.2d 465
• Parties: Michael MCLAUGHLIN v. Kevin MURPHY, et al.
• Court: U.S. District Court — District of Maryland

372 F.Supp.2d 465

Michael MCLAUGHLIN v. Kevin MURPHY, et al.

No. Civ. CCB-04-767.

United States District Court, D. Maryland.

July 20, 2004.

Memorandum Denying Reconsideration October 13, 2004.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Howard Benjamin Hoffman, Howard B Hoffman Esquire Attorney at Law, Rockville, MD, for Plaintiff.

Jeffrey Louis Forman, Kauffman and Forman PA, Towson, MD, for Defendant.

MEMORANDUM

BLAKE, District Judge.

Plaintiff Michael McLaughlin brings this action against Defendants Freedmont Mortgage Corporation and Kevin Murphy, the President of Freedmont (collectively "Freedmont"), asserting claims under the Fair Labor Standards Act ("FLSA") and Maryland state law. Pending before the court is Freedmont's motion to dismiss or, in the alternative, for summary judgment. For the reasons stated below, Freedmont's motion will be granted in part and denied in part.

I.

McLaughlin was employed by Freedmont as a mortgage broker from August 2001 to November 2003. He was paid on a strict commission basis, with no regular salary. McLaughlin was terminated on or about November 17, 2003, and he filed this five-count action in March 2004. Counts I and II allege violations of the FLSA, 29 U.S.C. § 201 et seq. He claims that at various times during the term of his employment, he worked in excess of forty hours per week and did not receive overtime pay. He also asserts that for approximately twenty weeks throughout the course of his employment, he did not receive any wage at all for his work, let alone the statutory minimum wage of $5.15 per hour. In Counts III through V, McLaughlin alleges violations of Maryland state law, asserting claims under a theory of quantum meruit and under the Maryland Wage Payment and Collection Law ("MWPCL"), Md.Code Ann. Lab. & Empl. § 3-501 et seq. He claims that he is entitled to some compensation for three loans that he prospected and was developing at the time of his termination.

II.

A.

Freedmont filed a motion to dismiss all five counts for failure to state a claim, or in the alternative, a motion for summary judgment. A motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6) should be denied "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). On such a motion, the court must view the allegations in the complaint in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974).

If, however, matters outside the pleadings are presented and considered by the court, the motion will be treated as one for summary judgment under Rule 56. Fed.R.Civ.P. 12(b)(6). Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, admissions, and affidavits demonstrate that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The materiality requirement of the summary judgment standard means that only those factual disputes that might affect the outcome of the suit preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In order for there to be a "genuine" issue of material fact, the evidence must be such that a reasonable jury could return a verdict for the non-moving party. Id.

B.

McLaughlin brings his two FLSA claims under 29 U.S.C. §§ 206 and 207. Section 206 requires every employer to pay employees not less than $5.15 an hour. Section 207 requires employers to compensate employees at a rate not less than one and a half times the regular rate at which the person is employed for every hour worked in excess of forty hours per week. However, the FLSA exempts certain employees from the requirements of Sections 206 and 207. 29 U.S.C. § 213. Under Section 213, employees employed in a bona fide executive, administrative, or professional capacity are exempt, as are employees employed in the capacity of "outside salesman," as that term is defined by FLSA regulations. These FLSA exemptions must be narrowly construed. Stricker v. Eastern Off Road Equip., Inc., 935 F.Supp. 650, 654 (D.Md.1996). Furthermore, because an employee's exempt status is an affirmative defense, the employer bears the burden of proving the exemption by clear and convincing evidence. Id. at 653-54.

Freedmont argues that McLaughlin is exempt under 29 U.S.C. § 213 as an outside salesman. An outside salesman is defined as an employee: (1) who is employed for the purpose of and who is customarily engaged away from the employer's place of business in making sales or obtaining orders or contracts for services; and (2) whose hours of work of a nature other than that just described do not exceed 20 percent of the hours worked in the workweek by nonexempt employees of the employer. 29 C.F.R. § 541.500(a)-(b). Work performed incidental to and in conjunction with the employee's own sales or solicitations, however, is not considered nonexempt work that counts towards the 20 percent limit. 29 C.F.R. § 541.500(b). The regulations further elucidate the concept of "outside salesman" as follows:

Section 541.5 requires that an outside salesman be customarily and regularly engaged "away from his employer's place or places of business". This requirement is based on the obvious connotation of the word "outside" in the term "outside salesman". It would obviously lie beyond the scope of the Administrator's authority that "outside salesman" should be construed to include inside salesmen. Inside sales and other inside work ... is nonexempt. Characteristically, the outside salesman is one who makes his sales at his customer's place of business. This is the reverse of sales made by mail or telephone.

29 C.F.R. § 541.502. Case law addressing this issue confirms that where and how salesmen do most of their work is the key factor in determining whether they are outside salesmen exempt from the FLSA. See, e.g., Nielsen v. Devry Inc., 302 F.Supp.2d 747, 761 (W.D.Mich.2003); Reich v. Chicago Title Ins. Co., 853 F.Supp. 1325, 1332-33 (D.Kan.1994).¹

Because an employee's exempt status is an affirmative defense that Freedmont must prove, it cannot ordinarily be determined on a Rule 12(b)(6) motion to dismiss for failure to state a claim. Cf. Paukstis v. Kenwood Golf & Country Club, 241 F.Supp.2d 551, 557-58 (D.Md.2003) (cannot resolve question of exemption under Maryland Wage and Hour Law on 12(b)(6) motion because exemption is an affirmative defense). The court should instead consider this issue on summary judgment. Id. Freedmont may have anticipated this fact, for it attached to its motion the affidavit of Carl Delmont, its Chief Operating Officer, and other exhibits in an effort to demonstrate that McLaughlin qualifies as an outside salesman. McLaughlin responded in turn with two of his own affidavits, one of which addresses the FLSA issues only ("McLaughlin FLSA Aff.") and attempts to contradict Freedmont's affidavit.

At this point, no discovery has taken place. Generally, summary judgment must not be ordered when the nonmoving party has not had the opportunity to discover information essential to his opposition. Harrods Ltd. v. Sixty Internet Domain Names, 302 F.3d 214, 244 (4th Cir.2002). If the nonmoving party believes that more discovery is necessary for it to demonstrate a genuine issue of material fact, it must file a Rule 56(f) affidavit stating that it could not properly oppose a summary judgment motion without a chance for discovery. Id. A party may not simply "lament" the lack of discovery; it must set forth its specific discovery needs in the Rule 56(f) affidavit. Curtis v. Pracht, 202 F.Supp.2d 406, 412 (D.Md.2002).

In this case, McLaughlin argues that he is an inside salesman, and thus is not exempt from the FLSA. However, his FLSA affidavit indicates that he does not recall with certainty the specific number of clients and potential clients he worked with in person as compared to those he worked with over the telephone or through the mail. Throughout his affidavit, he has scattered references to the fact that he has not had the opportunity for discovery. (See McLaughlin FLSA Aff. ¶¶ 5, 9, 10, 11, 14.) The affidavit also contains two paragraphs in which he specifically requests discovery to determine all of the loans he closed and the names of potential clients with whom he might have met in order to better determine how often he saw clients outside the office. (McLaughlin FLSA Aff. ¶¶ 16, 17.) This evidence could be sufficient to create a genuine issue of material fact because it is relevant to McLaughlin's status as an outside salesman, which is an issue that could determine the outcome of the FLSA claims. The fact that the affidavit also contains McLaughlin's recollections about his work at Freedmont in an attempt to defeat summary judgment on the merits does not mean that it cannot also be a Rule 56(f) affidavit. See 10B Charles Alan Wright Arthur R. Miller, & Mary Kay Kane, Fed. Prac. & Proc. § 2740 (3d ed.2004) (party that has obtained some evidentiary facts should present them in a Rule 56(f) affidavit when seeking to have the motion held in abeyance so that more facts can be investigated).

Even if this does not qualify as a Rule 56(f) affidavit, the Fourth Circuit has held that if the nonmoving party makes objections to summary judgment that satisfy the purpose of the affidavit and has not been lax in discovery, the court may order further discovery without the affidavit. Harrods, 302 F.3d at 244-45; Chernova v. Elec. Sys. Servs., Inc., 247 F.Supp.2d 720, 722-23 (D.Md.2003). Here, McLaughlin has devoted an entire section of his opposition brief to arguing that he is entitled to discovery under Rule 56(f), and he has identified the specific areas of discovery needed to create a genuine...