Morrissey v. CES Comput. Enhancement Sys.
| Decision Date | 09 March 2023 |
| Docket Number | CIVIL SAG-21-00899-SAG |
| Parties | JANET MORRISSEY Plaintiff, v. CES COMPUTER ENHANCEMENT SYSTEMS, INC., et al., Defendants. |
| Court | U.S. District Court — District of Maryland |
Plaintiff Janet Morrissey brought this suit against her former employer, CES Computer Enhancement Systems, Inc. (“CES”), and its owner, Richard Robertson (collectively, “Defendants”), asserting claims under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (“FLSA”), and Maryland state law for unpaid overtime, sales commissions, and vacation time. Defendants have filed a motion for summary judgment, ECF 45 which is now fully briefed. See ECF 45-1, 48-1, 51. This Court has reviewed the parties' memoranda and the exhibits attached thereto. No hearing is necessary. See Loc. R. 105.6 (D. Md. 2021). For the following reasons, Defendants' motion will be denied.
The following facts are viewed in the light most favorable to Morrissey as the non-moving party. CES is a company based in Frederick, Maryland, that provides information technology (“IT”) services, in addition to selling and servicing computer hardware and software. ECF 45-4 ¶ 2. Robertson is CES's founder and owner. Id. ¶ 1. In October, 2018, Robertson hired Morrissey as a “Business Development Manager.” Id. ¶¶ 3-4; ECF 45-5 at 1. Robertson testified that he was impressed by Morrissey's business experience and that he “just need[ed] more help at the time” because ECF 48-2 at 94:1-9, 94:1821. Shortly after Morrissey was hired, she and Robertson began dating. ECF 45-2 at 249:8-11.
Morrissey's employment agreement included a salary provision which set forth the terms of her compensation:
Pay will be based on commission as a percentage of net sales profit. The base salary is an unrecoverable draw against the salary of $40,000/year. Commission will be paid at a rate of 18% of net profit of hardware sales and 12% per billable hour rate for service (labor) related sales. All yearly service contracts will be based an expected number of billable hours per month. Base salary is based on a minimum 40 hour work week.
While at CES, Morrissey would generally begin working as early as 5:30 a.m., and she frequently worked until late at night. ECF 45-2 at 526:8-11. She also sometimes worked weekends. Id. at 536:1-19. In total, Morrissey estimated that she worked 68 hours per week. Id. Despite routinely working more than the typical 40-hour work week, Morrissey was not paid overtime. See ECF 51-4, 51-5, 51-6. Rather, she was paid a biweekly salary of $1,600, which later increased to $1,760. Id. Morrissey also regularly received additional payments that were labeled as “bonus” payments in CES's payroll records. ECF 51-4, 51-5. Robertson contends these payments were in fact made to “stay ahead of [Morrissey's] commission,” ECF 45-3 at 353:6-10, though he acknowledged that, because of issues with CES's payroll system, he was unable to precisely calculate Morrissey's commissions for the majority of her time with the company, ECF 48-2 at 31:3-34:8, 433:12-17. Morrissey, on the other hand, testified that the bonuses were “random,” and that Robertson gave the bonuses to her and other CES employees for doing good work or completing special projects. ECF 48-3 at 365:2-368:21, 390:6-17. Morrissey also claimed that her bonus payments for 2020 were later reclassified as commission payments in CES's payroll system.
ECF 48-3 at 619:17-620:16; see also ECF 51-6. Morrissey's employment at CES was terminated in December, 2020. ECF 45-2 at 135:8.
Morrissey filed this suit on April 9, 2021. ECF 1. She asserts claims under the FLSA (Count I) and the Maryland Wage and Hour Law (“MWHL”) (Count II) for unpaid overtime. ECF 17 ¶¶ 28-47. She also alleges violations of the Maryland Wage Payment and Collection Law (“MWPCL”) for unpaid commissions and vacation time (Counts III and IV), along with state law claims for Breach of Contract (Count V), Unjust Enrichment (Count VI), and Promissory Estoppel (Count VII). Id. ¶¶ 48-90.
Under Federal Rule of Civil Procedure 56(a), summary judgment is appropriate only “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The moving party bears the burden of showing that there is no genuine dispute of material facts. See Casey v. Geek Squad Subsidiary Best Buy Stores, L.P., 823 F.Supp.2d 334, 348 (D. Md. 2011) (citing Pulliam Inv. Co. v. Cameo Props., 810 F.2d 1282, 1286 (4th Cir. 1987)). If the moving party establishes that there is no evidence to support the nonmoving party's case, the burden then shifts to the non-moving party to proffer specific facts to show a genuine issue exists for trial. Id. The non-moving party must provide enough admissible evidence to “carry the burden of proof of [its] claim at trial.” Mitchell v. Data Gen. Corp., 12 F.3d 1310, 1316 (4th Cir. 1993). The mere existence of a scintilla of evidence in support of the nonmoving party's position will be insufficient; there must be evidence on which the jury could reasonably find in its favor. Casey, 823 F.Supp.2d at 348 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986)). Moreover, a genuine issue of material fact cannot rest on “mere speculation, or building one inference upon another.” Id. at 349 (quoting Miskin v. Baxter Healthcare Corp., 107 F.Supp.2d 669, 671 (D. Md. 1999)).
Summary judgment shall also be warranted if the non-moving party fails to provide evidence that establishes an essential element of the case. Id. at 352. The non-moving party “must produce competent evidence on each element of [its] claim.” Id. at 348-49 (quoting Miskin, 107 F.Supp.2d at 671). If the non-moving party fails to do so, “there can be no genuine issue as to any material fact,” because the failure to prove an essential element of the case “necessarily renders all other facts immaterial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Coleman v. United States, 369 Fed.Appx. 459, 461 (4th Cir. 2010) (unpublished)). In ruling on a motion for summary judgment, a court must view all the facts, including reasonable inferences to be drawn from them, “in the light most favorable to the party opposing the motion.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)).
Defendants seek summary judgment on Counts I and II on the grounds that Morrissey is exempt from the overtime requirements of the FLSA and MWHL. Defendants also contend that this Court should decline supplemental jurisdiction over Morrissey's additional state law claims.
“[T]he FLSA requires employers to pay overtime to covered employees who work more than 40 hours in a week.” Encino Motorcars, LLC v. Navarro, 138 S.Ct. 1134, 1138 (2018) (citing 29 U.S.C. § 207(a)). However, these overtime compensation requirements do not apply to exempt employees. Lovo v. Am. Sugar Ref., Inc., Civ. No. RDB-17-418, 2018 WL 3956688, at *7 (D. Md. Aug. 17, 2018) (citing 29 U.S.C. § 213). “The FLSA exemptions are affirmative defenses, and the employer bears the burden of proof to establish ‘by clear and convincing evidence that an employee qualifies for exemption.'” Pang v. Adult Day Health, Inc., Civ. No. DLB-19-2283, 2022 WL 2869161, at *7 (D. Md. July 21, 2022) (quoting Shockley v. City of Newport News, 997 F.2d 18, 21 (4th Cir. 1993)).[1]“To be clear and convincing, evidence must place in the ultimate factfinder an abiding conviction that the truth of [the party's] factual contentions are highly probable.” Cannon v. Peck, 36 F.4th 547, 566 (4th Cir. 2022) (quotation omitted).
Here, Defendants assert two exemptions to the FLSA's overtime pay requirements: the exemption for certain commission-based employees, 29 U.S.C. § 207(i) (), and the exemption for administrative employees, 29 U.S.C. § 213(a)(1) (the “administrative exemption”).
To satisfy the bona fide commission exemption, an employer must demonstrate that: (1) the employee was employed by a retail or service establishment; (2) the employee's regular rate of pay exceeded one and one-half times the minimum hourly rate; and (3) more than half of the employee's compensation for a representative period (not less than one month) represented commissions on goods or services. 29 U.S.C. § 207(i); 29 C.F.R. § 779.412.
Initially the parties dispute whether Defendants have waived their ability to assert this exemption as a defense. That is, Morrissey argues that Defendants failed to specifically plead this exemption in their answer, ECF 9, and amended answer, ECF 18. “[T]he application of an exemption under the Fair Labor Standards Act is a matter of affirmative defense ....” Corning Glass Works v. Brennan, 417 U.S. 188, 196-97 (1974). And under Federal Rule of Civil Procedure 8(c)(1), a party responding to a pleading “must affirmatively state any avoidance or affirmative defense.” This Court has routinely held that that the heightened pleading standard enunciated in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) and Ashcroft v. Iqbal, 556 U.S. 662, 677-84 (2009), applies to affirmative defenses. See, e.g., McCoy v. Transdev Servs., Inc., Civ. No. DKC-19-2137, 2022 WL 951996, at *24 (D. Md. Mar. 30, 2022) (“District courts in this district have mostly, if not unanimously, applied the heightened Twombly-Iqbal pleading standard to affirmative defenses ....”). That standard “requires that allegations be more than ‘labels or conclusions,'...
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