The Supreme Court of the United States (SCOTUS) does not take up cases on a whim. The Court carefully selects each case based on a number of different factors, some of them having little to do with the facts of the case itself. This is especially true of the modern-day Supreme Court, where writs of certiorari multiply each session, yet the Court’s docket grows smaller and smaller. Consider that nearly three decades ago the court routinely decided 100-150 cases, but now selects almost half as many among the 8,000 (give or take a thousand) requests. This trend has led to a very selective process, wherein nearly all of the cases the SCOTUS accepts are of the “landmark” variety, or at least are treated like it. Recently, the Supreme Court agreed to rule on Christopher v. SmithKline Beecham Corp. The questions involved in the case are a classic example of this progression.
Christopher v. SmithKline Beecham Corp. is both an important FLSA overtime exemption case, and also a potential referendum on the weight given to amicus breifs from executive agencies. The litigation arose over a dispute regarding the overtime pay of SmithKline’s pharmaceutical sales representatives. The company, and all pharmaceutical companies, have traditionally viewed sales reps as “outside sales” employees, meaning they are exempt from overtime pay. While much of the legal and media coverage will undoubtedly focus on this aspect of the case, the more far-reaching question is whether or not the Ninth Circuit Court (where the case originated) was obliged to give deference to the Department of Labor’s amicus brief. The Department of Labor (DOL) has repeatedly submitted amicus briefs in similar cases, arguing that the sales reps not be exempt, in essence, advocating for overtime pay.
If the Supreme Court addresses this piece of the litigation in a positive light it could increase the influence of the amicus briefs submitted by the DOL. Obviously, the opposite is also true, and in that situation, the DOL may think twice before submitting an brief in future litigation. Given the scope of the case and the Supreme Court’s involvement, the attorneys on the LexBlog Network have once again rushed to their keyboards to offer up some analysis and insight. The attorneys at EpsteinBeckerGreen are on target with two posts authored by three attorneys, all on the Wage & Hour Defense Blog. Michael Thompson, a member in the firm’s Newark, NJ offices, delves into the long and sordid history surrounding FLSA overtime exemption cases involving pharmaceutical sales reps:
“In Ibanez v. Abbott Laboratories, Inc., the Eastern District of Pennsylvania issued the latest ruling in the ongoing dispute over whether pharmaceutical sales representatives are exempt from the overtime requirements of the FLSA.
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The Ninth Circuit Court of Appeals in Christopher v. SmithKline Beecham Corp., for example, rejected the argument that pharmaceutical sales representatives did not qualify for the Outside Sales exemption. The Ninth Circuit recognized that the sales representatives do not “close” direct sales. However, the Court noted that the sales representatives were prohibited by law from making direct sales. The Ninth Circuit accordingly held that, in the context of the industry, “common sense” showed that the pharmaceutical sales representatives fell within the terms of the Outside Sales exemption.
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Conversely, in In re Novartis Wage & Hour Litigation, the Second Circuit Court of Appeals concluded that the Novartis sales representatives did not meet the requirements of the Outside Sales exemption because they did not “make sales.””
With these three cases in mind, David Garland and Douglas Weiner examine Christopher, and the two main points the Supreme Court will be evaluating upon their review:
“The Ninth Circuit rejected the plaintiffs’ and DOL’s “rigid, formalistic interpretation” of the FLSA’s definition of “sale,” which provides that “Sale” … includes any “sale … or other disposition.” 29 U.S.C. 203(k). Because of the uncertainty in this unsettled area of law, both the employee plaintiffs and the employer asked the U.S. Supreme Court to review the Ninth Circuit’s decision.
Pertinent to the aggressive approach the DOL has recently taken in submitting unsolicited amicus briefs in significant cases, another issue the Supreme Court may review is the degree of deference, if any, the court owes to an amicus brief submitted by the DOL. Again in stark contrast, the Second Circuit gave the DOL’s amicus brief “controlling deference” to interpret the DOL’s own regulations while the Ninth Circuit gave the DOL’s amicus brief “no deference” finding it was a departure from established industry norm that the DOL used to short-cut the public notice – and – comment rule making procedures.”
The Wage and Hour Practice Group at Littler Mendelson offers more insight into the reasoning behind the Ninth Circuit’s decision on the firm’s blog Wage & Hour Counsel:
“The DOL’s amicus brief did not persuade the Ninth Circuit, which concluded that PSRs did, in fact, qualify for the outside sales exemption. Specifically, the Ninth Circuit reasoned that:
“Plaintiffs’ contention that they do not “sell” to doctors ignores the structure and realities of the heavily regulated pharmaceutical industry. It is undisputed that federal law prohibits pharmaceutical manufacturers from directly selling prescription medications to patients. Plaintiffs suggest that despite being hired for their sales experience, being trained in sales methods, encouraging physicians to prescribe their products, and receiving commission-based compensation tied to sales, their job cannot “in some sense” be called selling. This view ignores the reality of the nature of the work of detailers, as it has been carried out for decades.””
Last but not least, Richard Alfred and Jessica Schauer, attorneys in Seyfarth Shaw‘s Wage & Hour Litigation Practice Group, wrap things up with a look at the long-term effects of the Supreme Court’s decision on their Wage & Hour Litigation Blog:
“A decision by the Supreme Court on the scope of the outside sales exemption will also impact the ability of other employers to apply the functional approach to this exemption in determining whether employees are “making sales” where the final step of the sales process – closing the sale – is performed by others. Such a decision will mark the first time that Court has endeavored to interpret this exemption in the more than seventy-year history of the FLSA.
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Finally, the expected Supreme Court decision will also determine whether the DOL’s “ambush byamicus” strategy will succeed. If the Court holds that the DOL’s amicus brief in Christopher is entitled to deference – even if it is not entitled to the very high level of deference afforded by the Second Circuit in Novartis – it is likely that the agency will increase its involvement in wage and hour litigation going forward as a means to attempt to change positions taken by prior administrations without time-consuming notice-and-comment rulemaking. A Supreme Court decision siding with the Ninth Circuit on this issue will put an end to the DOL’s amicus strategy and require the agency to engage in proper rulemaking.”
Like any news junkie with a legal bent, I’m fascinated by the cases that come across the Supreme Court’s docket. Unlike some of the litigation you see in the lower courts, you don’t have to dig through legal minutiae to find the interesting and significant cases or points upon which a decision turns. Nearly every sentence carries meaning, and every ruling alters the legal landscape in some substantive manner. Christopher is particularly intriguing to me because of the background issues. Executive agencies offer amicus briefs to all levels of courts because they are traditionally viewed as experts as well as ‘friends of the court’. This ruling could signal a subtle shift in how much weight courts will give briefs submitted by these agencies. However, one of the beautiful things about the legal system, is that it could also mean nothing at all. Only time will tell.