Tsyn v. Wells Fargo Advisors, LLC

• Decision Date: 16 February 2016
• Docket Number: Case No. 14-cv-02552-LB
• Parties: VLAD TSYN, et al., Plaintiffs, v. WELLS FARGO ADVISORS, LLC, Defendant.
• Court: U.S. District Court — Northern District of California

VLAD TSYN, et al., Plaintiffs, v. WELLS FARGO ADVISORS, LLC, Defendant.

Case No. 14-cv-02552-LB

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA San Francisco Division

February 16, 2016

ORDER GRANTING SUMMARY JUDGMENT & DENYING CERTIFICATION

[Re: ECF Nos. 54, 70, 85]

INTRODUCTION

This is an overtime-compensation suit under the federal Fair Labor Standards Act ("FLSA") and similar California laws. (ECF No. 29.)¹ Plaintiffs Vlad Tsyn and Catherine Horan-Walker have worked for defendant Wells Fargo Advisors as licensed financial advisors. They claim that Wells Fargo misclassified them as exempt from the FLSA's overtime-pay mandate and so failed to pay them requisite compensation. (See generally id.)

Three motions are before the court. The plaintiffs move the court to conditionally certify a collective action on their FLSA claim. (ECF Nos. 41, 54.) Defendant Wells Fargo, in two separatemotions (one directed to each plaintiff), asks the court to grant summary judgment against that claim. (ECF Nos. 70, 85.) The court held a hearing on January 28, 2016.

The facts are undisputed. The parties disagree only over how to characterize those facts. In short, Wells Fargo contends that the most important aspects of the plaintiffs' jobs were collecting and analyzing customer information, assessing which financial products and services would best suit a client's needs, and giving clients appropriate advice. Wells Fargo argues that this exempts the plaintiffs from the FLSA's overtime-pay mandate as a matter of law. The plaintiffs do not deny that they performed these duties. They view this work as being secondary to "selling financial products," however, and argue that, because their "primary duty" was sales, they had to be paid added compensation for overtime work.

The plaintiffs' factual description of their work leaves no genuine issue for trial. Their primary duties were those things that governing regulations say will bring a financial-services employee within the FLSA's administrative exemption. Their primary duty was not selling financial products. The court therefore grants the defendant's motions for partial summary judgment and denies as moot the plaintiffs' motion to certify an FLSA collective action.

GOVERNING LAW

1. The FLSA's Administrative Exemption

The FLSA requires employers to pay premium overtime compensation to employees who work more than 40 hours per week. 29 U.S.C. § 207(a)(1). The FLSA does not cover all employees, however, and those that fall outside its overtime requirement are said to be "exempt" from the statute. Wells Fargo claims that plaintiffs Tsyn and Horan-Walker were "employed in a bona fide . . . administrative capacity" and so fell outside the FLSA. See 29 U.S.C. § 213(a)(1). Exemptions from the FLSA are "narrowly construed." Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960); Gieg v. DRR, Inc., 407 F.3d 1038, 1045 (9th Cir. 2005). Employees are presumed to be covered by the FLSA and entitled to overtime pay unless they "plainly and unmistakably" fit within an exemption. Arnold, 361 U.S. at 392. It is Wells Fargo's burden to prove that the plaintiffs were exempt. E.g., id.; Gieg, 407 F.3d at 1045.

The U.S. Department of Labor ("DOL") has "broad authority" to "define[] and delimit[]" the scope of this administrative exemption. See 29 U.S.C. § 213(a)(1); In re Farmers Ins. Exchange, Claims Reps. Overtime Pay Litig., 481 F.3d 1119, 1127 (9th Cir. 2006). Under the governing regulations, broadly speaking, an employee falls within the administrative exemption if she is 1) paid a salary of at least $455 per week, and her "primary duty" 2) "is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers," and 3) "includes the exercise of discretion and independent judgment with respect to matters of significance." 29 C.F.R. § 541.200(a).

The regulations define "primary duty" as

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 . . . 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.

29 C.F.R. § 541.700(a) (emphases added).

The regulations also give "examples" of employees who normally meet the administrative exemption. 29 C.F.R. § 541.203. The following example is of central importance to this case:

Employees in the financial services industry generally meet the duties requirements for the administrative exemption if their duties include work such as collecting and analyzing information regarding the customer's income, assets, investments or debts; determining which financial products best meet the customer's needs and financial circumstances; advising the customer regarding the advantages and disadvantages of different financial products; and marketing, servicing or promoting the employer's financial products. However, an employee whose primary duty is selling financial products does not qualify for the administrative exemption.

29 C.F.R. § 541.203(b).

When the DOL issued this regulation in 2004, it confirmed that employees who primarily engage in these exempt tasks satisfy both prongs of the administrative exemption's duty requirement: that is, they both perform work "directly related to . . . management or general business operations" and exercise "discretion and independent judgment" on "matters of significance." Defining and Delimiting the Exemption for Executive, Administrative, Professional,Outside Sales and Computer Employees, 69 Fed. Reg. 21,122, 22,146 (Apr. 23, 2004). The DOL also explained that "many financial services employees qualify as exempt administrative employees, even if they are involved in some selling to consumers." Id. (emphasis added).

Section 541.203(b) is consistent with decades of regulatory practice. The DOL's regulations have long treated "customers' brokers" (who are now called "registered representatives") as satisfying both heads of the administrative exemption's duties test. See, e.g., 29 C.F.R. § 541.205(c)(5) (1949) ("customers' brokers in stock exchange firms" perform "work directly related to the management policies or general business operations" of the employer); 29 C.F.R. § 541.207(d)(2) (1973) (exemption covers "the kind of discretion and independent judgment exercised by a customer's man in a brokerage house in deciding what recommendations to make to a customer for the purchase of securities"); see also Farmers, 481 F.3d at 1128 (factoring in historical consistency of 2004 regulations).

The DOL confirmed the effect of § 541.203(b) in a 2006 opinion letter. The DOL there concluded that licensed financial professionals, who mainly perform the duties listed in the first part of § 541.203(b), satisfy both duty prongs of the administrative exemption — even if "[a]s an incident to providing their clients investment advice, registered representatives also bring about the purchase or sale of such investments for their clients and execute the actual transactions that result from their financial advice . . . ." Dept. of Labor, Wage & Hour Div. Op. FLSA2006-43, 2006 WL 3832994, *2 (Nov. 27, 2006) (hereinafter "2006 Op. Ltr.") (emphases added).

Courts "must give deference to the DOL's interpretation of its own regulations through, for example, Opinion Letters." Farmers, 481 F.3d at 1129 (citing Webster v. Pub. Sch. Employees of Wash., 247 F.3d 910 (9th Cir. 2001) and Auer v. Robbins, 519 U.S. 452 (1997)). This is particularly true where the DOL's position "has been consistent over the years." See Farmers, 481 F.3d at 1129. The 2006 Opinion Letter, in particular, is through in reasoning through the applicable regulations, exhibits valid logic, and is consistent with historical regulatory guidance in this area. Its "power to persuade," and the deference this court must show it, are therefore "considerable." See Voss v. C.I.R., 796 F.3d 1051, 1066 (9th Cir. 2015) (reasoning, validity, consistency (citing Christopher v. SmithKline Beecham Corp., 132 S.Ct. 2156, 2168-69, 183 L.Ed.2d 153 (2012)));Bassiri v. Xerox Corp., 463 F.3d 927, 931-33 (9th Cir. 2006) ("[C]ourts grant an agency's interpretation of its own regulations considerable legal leeway." (quoting Barnhart v. Walton, 535 U.S. 212, 217 (2002))) (discussing Christensen v. Harris County, 529 U.S. 576 (2000), and Auer, supra).

2. Summary-Judgment Law

The court must grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). In judging evidence at the summary-judgment stage, the court does not make credibility determinations or weigh conflicting evidence, and draws all inferences in the light most favorable to the non-moving party. E.g., Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986); Ting v. United States, 927 F.2d 1504, 1509 (9th Cir.1991). The evidence presented by the parties must be admissible. Fed. R. Civ. P. 56(e). Conclusory testimony is insufficient to raise genuine issues of fact and defeat summary judgment. Thornhill Publ'g Co. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979); accord, e.g., Whitlock v. Pepsi Americas, 2009 WL 3415783, *2 (N.D. Cal. Oct. 21, 2009) aff'd sub nom. Dalton v. Pepsi Americas, 440 F. App'x 594 (9th Cir. 2011). In an FLSA suit, the duties that an employee performed is a question of fact. Whether those duties render the...