2010 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

2-2-2010

Patty Smith v. Johnson & Johnson

Precedential or Non-Precedential: Precedential

Docket No. 09-1223

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

Nos. 09-1223 and 09-1292

 

 

PATTY LEE SMITH, on behalf of herself and others

similarly situated, 

Appellant in No. 09-1223

v.

JOHNSON AND JOHNSON,

 

PATTY LEE SMITH, on behalf of herself and others

similarly situated

v.

JOHNSON AND JOHNSON,

Appellant in No. 09-1292

 

On Appeal from the United States District Court

for the District of New Jersey

(D.C. Civ. No. 06-04787)

Honorable Jose L. Linares, District Judge
2

 

Argued December 17, 2009

 

BEFORE: SLOVITER, JORDAN and 

GREENBERG, Circuit Judges

(Filed: February 02, 2010)

 

Michael R. DiChiara (argued)

Joseph & Herzfeld

757 Third Avenue

25th Floor

New York, NY 10017

Attorneys for Appellant-Cross-Appellee

Francis X. Dee (argued)

Stephen F. Payerle

McElroy, Deutsch, Mulvaney & Carpenter

100 Mulberry Street

Three Gateway Center

Newark, NJ 07102-0000

Rene M. Johnson

Thomas A. Linthorst

Larry L. Turner
3

Michael J. Ossip

Morgan, Lewis & Bockius

502 Carnegie Center

Princeton, NJ 08540-6241

Allyson N. Ho

Morgan, Lewis & Bochius

1000 Louisiana St., Suite 4200

Houston, TX 77002-5006

Attorneys for Appellee-Cross-Appellant

 

OPINION OF THE COURT

 

GREENBERG, Circuit Judge.

I. INTRODUCTION

This matter comes on before this Court on appeal and

cross-appeal from an order of the District Court entered on

December 30, 2008, granting summary judgment against

plaintiff Patty Lee Smith and in favor of defendant Johnson

and Johnson (“J&J”). We will affirm on Smith’s appeal but

will dismiss J&J’s cross-appeal. 

II. BACKGROUND
4

From April 2006 to October 2006, McNeill Pediatrics,

a J&J wholly-owned subsidiary, employed Smith in the

position of Senior Professional Sales Representative. In

essence, Smith’s position required her to travel to various

doctors’ offices and hospitals where she extolled the benefit

of J&J’s pharmaceutical drug Concerta to the prescribing

doctors. J&J hoped that the doctors, having learned about the

benefits of Concerta, would choose to prescribe this drug for

their patients. Smith, however, did not sell Concerta (a

controlled substance) directly to the doctors, as such sales are

prohibited by law.

J&J gave Smith a list of target doctors that it created

and told her to complete an average of ten visits per day,

visiting every doctor on her target list at least once each

quarter. To schedule visits with reluctant doctors, Smith had

to be inventive and cultivate relationships with the doctor’s

staff, an endeavor in which she found that coffee and donuts

were useful tools. J&J left the itinerary and order of Smith’s

visits to the target doctors to her discretion. The J&J target

list identified “high-priority” doctors that issued a large

number of prescriptions for Concerta or a competing product,

and Smith could choose to visit high-priority doctors more

than once each quarter. J&J gave her a budget for these visits

and she could use the money in the budget to take the doctors

to lunch or to sponsor seminars. 

At the meetings, Smith worked off of a prepared

“message” that J&J provided her, although she had some

discretion when deciding how to approach the conversation.

J&J gave her pre-approved visual aids and did not permit her

to use other aids. J&J trained its representatives to gauge a
5

doctor’s interest and knowledge about the product, eventually

building to a “commitment” to prescribe the drug. 

In Smith’s deposition she made it clear that she

appreciated the freedom and responsibility that her position

provided. Though a supervisor accompanied Smith during

the doctor visits on a few days each quarter, by her own

calculation Smith was unsupervised 95% of the time. As

Smith explained during her deposition, “[i]t was really up to

me to run the territory the way I wanted to. And it was not a

micromanaged type of job. I had pretty much the ability to

work it the way I wanted to work it.” App. at 54. According

to Smith’s job description, she was required to plan and

prioritize her responsibilities in a manner that maximized

business results. J&J witnesses testified (and J&J documents

confirmed) that Smith was the “expert” on her own territory

and was supposed to develop a strategic plan to achieve

higher sales. 

Before her visits, Smith completed pre-visit reports to

help her select the correct strategy for that day’s visits. At the

end of her day, Smith completed post-visit reports

summarizing the events of the visits. Smith would refer back

to this information before her next visit to the same doctors.

After adding up the time she spent writing pre-visit reports,

driving, conducting the visits, writing post-visit reports, and

completing other tasks, Smith worked more than eight hours

per day. 

Smith earned a base salary of $66,000 but was not paid

overtime, though J&J, at its discretion, could award her a

bonus. J&J considered the number of Concerta prescriptions
Smith’s situation is not unique, and cases similar to this one are 1

pending in the Courts of Appeals for the Second and Ninth

Circuits. Our opinion, however, focuses on Smith and the

specific facts developed in discovery in this case. Consequently,

we recognize that based on different facts, courts, including this

Court, considering similar issues involving sales representatives

for other pharmaceutical companies, or perhaps even for J&J,

might reach a different result than that we reach here. 

6

issued in Smith’s territory in determining her bonus. The

collection of this data and its direct relationship to Smith’s

efforts was, however, subject to error as purchasers might fill

their prescriptions in another territory or with a pharmacy that

would not release the pertinent information to J&J.

Smith filed suit seeking overtime pay under the Fair

Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et. seq.

After discovery, including most significantly Smith’s

deposition, revealed the facts that we just summarized, J&J

moved for summary judgment, arguing that she was not

entitled to overtime pay under the FLSA because she was

exempt from that statute under either the “outside salesman”

exemption or the “administrative employee” exemption. 29

U.S.C. § 213(a)(1) (statutory exemptions). Smith urged the

District Court to deny J&J’s motion for summary judgment

and, instead, to grant a motion that she filed to certify the case

as a class action.1

The District Court addressed these motions in an

opinion and order, both dated December 30, 2008. Smith v.

Johnson and Johnson, No. 06-4787, 2008 WL 5427802
J&J’s cross-appeal urges us to affirm on the alternate basis of 2

the outside salesman exemption. Yet a party, without taking a

cross-appeal, may urge in support of an order from which an

appeal has been taken any matter appearing in the record, at

least if the party relied on it in the district court. See United

States v. American Ry. Express Co., 265 U.S. 425, 435, 44 S.Ct.

560, 564 (1924). Consequently, J&J’s cross-appeal is

superfluous and we will dismiss it. See Kontakis v. Beyer, 19

F.3d 110, 112 n.1 (3d Cir. 1994). But the dismissal does not

change the arguments at issue, though it establishes that J&J

should not have filed its reply brief in support of its crossappeal. We have disregarded that brief inasmuch as J&J should

not enjoy the benefit of having an opportunity for extra briefing

due to its own procedural error. Indeed, in its brief J&J recited

that it recognized that it could have raised the outside salesman

exemption without a cross-appeal but that it filed the “notice of

cross-appeal out of an abundance of caution.” Appellee’s br. at

3 n.3. We can understand J&J’s counsel’s caution with respect

7

(D.N.J. Dec. 30, 2008). The Court analyzed the outside

salesman exemption first, but found that it did not apply to

Smith. When it turned to the administrative employee

exemption, its result was different as the Court found that it

did apply to Smith. Accordingly, the Court granted J&J

summary judgment. In view of the Court’s substantive ruling,

Smith’s motion for class action certification became moot and

the Court denied it.

Smith then filed this appeal, and J&J filed a crossappeal. We will affirm on Smith’s appeal but dismiss the

cross-appeal.2
to filing a notice of cross-appeal, but it should not have filed the

reply brief on the cross-appeal without leave of this Court, as it

recognized that the cross-appeal probably was not necessary.

8

III. JURISDICTION AND STANDARD OF REVIEW

The District Court had jurisdiction over the FLSA

claims under 29 U.S.C. § 216 and 28 U.S.C. § 1331. We

have jurisdiction over Smith’s appeal under 28 U.S.C. § 1291.

We exercise plenary review over a grant of summary

judgment and apply the same standard used by the District

Court. Jefferson Bank v. Progressive Cas. Ins. Co., 965 F.2d

1274, 1278 (3d Cir. 1992); Turner v. Schering-Plough Corp.,

901 F.2d 335, 340 (3d Cir. 1990). Federal Rule of Civil

Procedure 56(c) sets forth the standard for summary judgment

and states that summary judgment shall be granted only if

“there is no genuine issue as to any material fact and . . . the

movant is entitled to judgment as a matter of law.” To be

material, a disputed fact must be one that might “affect the

outcome of the suit under governing law.” Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510

(1986). We draw all reasonable inferences in favor of the

non-movant. Meyer v. Riegel Prods. Corp., 720 F.2d 303,

307 n.2 (3d Cir. 1983).

IV. DISCUSSION
9

Under the FLSA, employees who work more than 40

hours per week are entitled to overtime pay unless they fall

within one of the FLSA’s exemptions. 29 U.S.C. §§ 207,

213. The FLSA is remedial and is construed broadly, but

exemptions to it are construed narrowly i.e., against the

employer. Lawrence v. City of Philadelphia, 527 F.3d 299,

310 (3d Cir. 2008). Congress has empowered the Secretary of

Labor to define and delimit the terms of the FLSA’s

exemptions by regulation. 29 U.S.C. § 213(a). The

Secretary’s regulations, which were promulgated using

notice-and-comment procedures, have controlling weight

unless found to be arbitrary, capricious, or manifestly contrary

to the statute. See Chevron v. Natural Res. Def. Council, Inc.,

467 U.S. 837, 843–44, 104 S.Ct. 2778, 2782 (1984). The

District Court held that the administrative employee

exemption applied to Smith, so we focus on the regulations

describing that exemption. See 29 C.F.R. § 541.200–.204.

Under the administrative employee exemption, anyone

employed in a bona fide administrative capacity is exempt

from the FLSA’s overtime requirements. 29 U.S.C. §

213(a)(1). The Secretary has defined an administrative

employee as someone:

(1) Compensated on a salary or fee basis at a

rate of not less than $455 per week . . .

exclusive of board, lodging or other facilities;

(2) Whose primary duty is the performance of

office or non-manual work directly related to

the management or general business operations
10

of the employer or the employer’s customers;

and

(3) Whose primary duty includes the exercise of

discretion and independent judgment with

respect to matters of significance. 

29 C.F.R. §§ 541.200. The parties agree that Smith’s

salary qualifies her for the administrative employee

exemption, but dispute her qualification for that exemption

under the remaining two sections.

We find that the administrative employee exemption

applies to Smith. While testifying at her deposition Smith

elaborated on the independent and managerial qualities that

her position required. Her non-manual position required her

to form a strategic plan designed to maximize sales in her

territory. We think that this requirement satisfied the

“directly related to the management or general business

operations of the employer” provision of the administrative

employee exemption because it involved a high level of

planning and foresight, and the strategic plan that Smith

developed guided the execution of her remaining duties. See

29 C.F.R. § 541.203(e) (“Human resources managers who

formulate, interpret or implement employment policies and

management consultants who study the operations of a

business and propose changes in organization generally meet

the duties requirements for the administrative exemption.”);

Reich v. John Alden Life Ins. Co., 126 F.3d 1, 3–5, 12 (1st

Cir. 1997) (applying administrative employee exemption to

marketing representatives who dealt with licensed
11

independent insurance agents who, in turn, dealt with

purchasers of insurance products). 

When we turn to the “exercise of discretion and

independent judgment with respect to matters of significance”

requirement, we note that Smith executed nearly all of her

duties without direct oversight. In fact, she described herself

as the manager of her own business who could run her own

territory as she saw fit. Given these descriptions, we conclude

that Smith was subject to the administrative employee

exemption. Cf. Cote v. Burroughs Wellcome Co., 558 F.

Supp. 883, 886-87 (E.D. Pa. 1982) (applying administrative

employee exemption to medical “detailer” even though

description of employee’s duties was more parsimonious than

Smith’s description of her duties here).

Smith nevertheless has asked us to limit the

significance of her testimony and find that she lacked

discretion with respect to matters of significance. Indeed, her

attorney contended at oral argument on this appeal that Smith

overinflated her importance during the deposition, and that we

should consider her statements mere puffery. We are

unwilling to ignore Smith’s testimony to hold that there is an

issue of material fact merely because of Smith’s request that

we do so. In this regard, we point out that when Smith

testified she surely understood the significance of her

testimony in the context of this case. In the circumstances

before us, we accept Smith’s deposition testimony as an
We also point out that although the “sham affidavit” doctrine is 3

not applicable here, the principle of that doctrine surely is.

Under the sham affidavit doctrine a court will disregard an

affidavit inconsistent with an affiant’s prior deposition

testimony when a party moves for summary judgment on the

basis of the deposition unless the party relying on the affidavit

in opposition to the motion can present a legitimate reason for

the discrepancies between the deposition and the affidavit. See

Baer v. Chase, 392 F.3d 609, 623-25 (3d Cir. 2004). We do not

regard Smith’s counsel’s contention that Smith’s deposition

testimony was puffery as a reason to disregard the deposition.

Inasmuch as we affirm the District Court’s application of the 4

administrative employee exemption, we do not address the

question of the applicability of the outside salesman exemption.

12

accurate description of her position and thus we will affirm

the order granting J&J summary judgment.3

In reaching our result we have not overlooked our

opinion in Martin v. Cooper Elec. Supply Co., 940 F.2d 896

(3d Cir. 1991), on which Smith heavily relies. Rather, we

find that Cooper is distinguishable on the facts. Moreover, we

agree with the District Court that changes in the Secretary’s

regulations since Cooper make that case inapplicable here.

See Smith, 2008 WL 5427802, at *8-9.4

V. CONCLUSION
13

The District Court’s order of December 30, 2009 in

No. 09-1223 will be affirmed and J&J’s cross-appeal in No.

09-1292 will be dismissed. The parties will bear their own

costs on this appeal.