Sanchez Carrera v. Emd Sales, Inc.

Decision Date20 August 2019
Docket NumberCIVIL NO. JKB-17-3066
Citation402 F.Supp.3d 128
Parties Faustino SANCHEZ CARRERA, et al., Plaintiffs v. EMD SALES, INC., et al., Defendants
CourtU.S. District Court — District of Maryland

Omar Vincent Melehy, Andrew G. Balashov, Suvita Chiman Melehy, Melehy and Associates LLC, Silver Spring, MD, for Plaintiffs.

Kevin C. McCormick, Howard Ross Feldman, Whiteford Taylor and Preston LLP, Baltimore, MD, Thomas Collier Mugavero, Whiteford, Taylor & Preston, LLP, Falls Church, VA, Katelyn Patricia Brady, Whiteford, Taylor & Preston, LLP, Washington, DC, for Defendants.

MEMORANDUM

James K. Bredar, Chief Judge

Plaintiffs Faustino Sanchez Carrera, Jesus David Muro, and Magdaleno Gervacio filed suit against Defendants E.M.D. Sales, Inc. ("EMD"), E & R Sales and Marketing Services, Inc. ("E & R"), and Elda M. Devarie, alleging a violation of the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. ("FLSA" or "the Act"), for failure to pay overtime wages. Plaintiffs seek back wages, liquidated damages, costs and reasonable attorneys' fees, and a permanent injunction to prevent Defendants from continuing to violate the FLSA. 29 U.S.C. §§ 216(b), 217. Now pending before the Court are Defendants' Motion for Summary Judgment (ECF No. 97), Plaintiffs' Cross-Motion for Partial Summary Judgment (ECF No. 104), Plaintiffs' Motion to Seal Exhibit 15 of Plaintiffs' Motion for Partial Summary Judgement (ECF No. 106), and Plaintiffs' Motion to Strike Defendants' Summary Judgment Exhibits G9, G10, G11 and G12 in their entirety and Exhibit G ¶¶ 14–17 (ECF No. 109). No hearing is required. See Local Rule 105.6 (D. Md. 2018). For the reasons set forth below, the Defendants' Motion for Summary Judgment will be granted in part and denied in part, Plaintiffs' Cross-Motion for Partial Summary Judgment will be denied, Plaintiffs' Motion to Seal will be denied, and Plaintiffs' Motion to Strike will be granted in part and denied in part.

I. Background

Mr. Carrera and Mr. Gervacio are sales representatives for EMD, a company that distributes Latin American, Caribbean, and Asian food products to stores throughout the Washington metropolitan area. (Def. M.S.J. Mem. at 1, ECF No. 97-1; Pl. M.S.J. Exh. 1 ¶ 1, Exh. 7 ¶ 1, ECF. No. 104.) Mr. Muro worked as an EMD sales representative until August 2017. (Pl. M.S.J. Exh. 8 ¶ 1.) Elda Devarie is EMD's President and Chief Executive Officer. (Def. M.S.J. Exh. A at 4.) Ms. Devarie also owns E & R, a separate company which provides EMD with merchandising services once EMD delivers products to its customers. (Def. M.S.J. Mem. at 3; Pl. M.S.J. Mem. at 6, Exh. 16 at 36, ECF No. 108.) Plaintiffs allege that Defendants failed to pay them overtime wages pursuant to the FLSA. Defendants argue that Plaintiffs are subject to the FLSA's outside sales exemption, which exempts employees from overtime pay so long as their primary duty is making sales and they generally work outside of the office in furtherance of those sales. 29 C.F.R. § 541.500(a).

Sales representatives at EMD are represented by the United Food and Commercial Works Union, Local 400 ("Union"). (Def. M.S.J. Mem. at 2, Exh. B.) As provided in the Union Agreement negotiated between the Union and Ms. Devarie, a sales representative's entire salary derives from commissions for the sale of EMD products. (Def. M.S.J. Exh. B at 12.) Sales representatives spend most of their time outside of the office visiting the stores on their route, and EMD does not track the hours sales representatives work. (Def. M.S.J. Mem. at 5, Exh. B at 12; Pl. M.S.J. Exh. 16 at 42, 45.) Twice a week, EMD holds conference calls for the sales representatives, which "are directed at specific EMD products that should be pushed by the outside sales representatives and other issues designed to help the sales representatives increase their sales of EMD products to their customers." (Def. M.S.J. Exh. G ¶ 8.) Sales representatives also attend a sales meeting at EMD every three weeks, which includes information on new EMD products and products EMD is "pushing" to stores, as well as updates on sales representatives' personal sales performance. (Id. ¶ 7.)

EMD provides food products to independent stores as well as larger chain stores, such as Walmart and Giant Food. (See, e.g. , Pl. M.S.J. Exh. 2 ¶ 4, Exh. 12.) EMD's sales representatives can try to open new accounts by pitching EMD products to independent stores, thereby adding stores to their sales route and increasing their sales. (See Pl. M.S.J. Exh. 1 ¶ 31; Def. M.S.J. Exh. C at 120:3–9.) At chain stores, by contrast, other EMD employees, including Ms. Devarie and her son, Roberto Devarie, establish the initial business relationship and negotiate floor space for EMD products at that time. (Pl. M.S.J. Exh. 1 ¶ 7. See also Pl. M.S.J. Exh. 2 ¶ 12, Exh. 3 ¶ 12.) In addition to sales representatives, EMD also employs key account managers, who negotiate prices and space allotments with EMD's chain store customers. (Pl. M.S.J. Exh. 1 ¶ 7.) Key account managers also work to convince chain stores to purchase new products from EMD in addition to those they already sell. (Id. ) At chain stores, the role of the sales representative is to arrange products, stock and condition shelves, take orders for new products, and try to obtain more space for EMD on the salesfloor and thereby sell more products. (Pl. M.S.J. Exh. 1 ¶¶ 3–7, Exh. 11.)

While it is undisputed that EMD sales representatives have unlimited ability to sell EMD products to independent stores (see Pl. M.S.J. Exh. 16 at 72), the parties dispute whether sales representatives can sell additional products or gain additional shelf space at chain stores. Chain stores rely on planograms, which are detailed maps of the products on the salesfloor, to determine what products to sell and where to place these products in the store. (See e.g. , Pl. M.S.J. Ex. 2 ¶ 6 (discussing planograms at Giant Food), Exh. 12 ¶ 15 (discussing planograms at Walmart), Exh. 3 ¶ 17 (discussing planograms at Safeway).) These planograms are created at the corporate level, and store managers have little to no leeway to alter the placement or mix of products as dictated by the planogram. (See, e.g. , Pl. M.S.J Ex. 2 ¶¶ 13, 15–16, Exh. 12 ¶ 15, Exh. 3 ¶ 17.) Accordingly, Plaintiffs state that only in "rare" situations are sales representatives able to negotiate for more space to sell additional products at chain stores. (Pl. M.S.J. Mem. at 4; see Pl. M.S.J. Exh. 7 ¶ 7.) Instead of making their own sales at chain stores, Plaintiffs state that they are simply taking orders to restock products or refill space that was already sold by another EMD employee. (Pl. M.S.J Exh. 1 ¶¶ 4–5, Exh. 7 ¶¶ 4–5, Exh. 8 ¶¶ 4–5.) Plaintiffs explain that over the last five years they have spent at least 97% of their time servicing chain stores, and that over 96% of their total product volume ordered and stocked during this time has derived from these chain stores. (Pl. M.S.J. Exh. 1 ¶ 2, Exh. 7 ¶ 2, Exh. 8 ¶ 2, Exh. 9.) Therefore, Plaintiffs argue, their ability to secure any sales on their own is extremely limited. (Pl. M.S.J. Mem. at 3–4.)

Defendants contest this characterization of the sales representative's job and provide declarations from other sales representatives stating that they have been successful in negotiating additional space for EMD products in chain stores. (Def. M.S.J. Exh. D at 45–49.) Juan Pablo Barreno, who has been a sales representative at EMD for twenty years, testified he spends 80% of his time on sales, and only 20% on "packing up" tasks. (Id. at 164:1–2.) He testified that building relationships with store managers has helped him to sell more EMD products. (Id. at 161–63.) Another sales representative, Mayra Palma, testified that her relationship with the grocery manager also enabled her to gain additional display space for EMD products at Giant Food. (Def. M.S.J. Exh. F at 62–64.) Mr. Barreno explained that while his ability to place more products on the shelf at chain stores is limited due to planograms, he is not limited in his ability to order additional products for the floor. He explained that while the shelves can only hold so much product, "we can create more space if we want," and "if we can create a secondary location, then we can send one case, twenty, thirty cases." (Def. M.S.J. Exh. D at 153–54.) Mr. Barreno did note, however, that over the last few years stores have started reducing the amount of "back stock" they will hold for the floor (id. at 154–55), making this more difficult.

The crux of the parties' dispute is whether the primary duty of sales representatives is to make sales. (Def. M.S.J. Mem. at 3; Pl. M.S.J. Mem. at 3.) Plaintiffs state their primary duty is not making sales, but rather is "perform[ing] labor–intensive promotional activities which are incidental to sales made by other EMS personnel at chain stores, such as re–stocking, ordering and perform[ing] related functions, including replenishing depleted product, physically stocking product, conditioning space, and writing credits for expired or damaged product they remove." (Pl. M.S.J. Mem. at 3–4; see also Pl. M.S.J. Exh. 1 ¶ 5, Exh. 11 at 9.) Defendants state that the primary duty of sales representatives is making sales and that they are "responsible for the sale of EMD products in their assigned stores." (Def. M.S.J. Mem. at 3.)

II. Evidentiary Issues

Before the Court considers the merits of the parties' cross-motions for summary judgment, the Court first considers the parties' challenges to the proffered evidence.

a. Plaintiffs' Motion to Strike

Plaintiffs have filed a motion to strike Exhibits G9–G12 and parts of Exhibit G from Defendants' motion for summary judgment and supporting memorandum of law. (Pl. Mot. Strike, ECF No. 109.) Exhibit G9 is a spreadsheet titled "Total Sales Reps – Total Accounts," which contains the total dollar amount of sales representatives' product sales for 2015 to 2018. (ECF No. 97-18.) Exhibit G10...

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