Court Opinion

ID: 4639742
Source: CourtListenerOpinion
Date Created: 2020-12-04 20:00:46.576518+00
Date Added: 2024-06-11T07:59:00.005092
License: Public Domain

Case: 19-31027    Document: 00515660243         Page: 1     Date Filed: 12/03/2020

           United States Court of Appeals
                for the Fifth Circuit
                                                                        United States Court of Appeals
                                                                                 Fifth Circuit

                                                                               FILED
                                                                        December 3, 2020
                                 No. 19-31027                             Lyle W. Cayce
                                                                               Clerk

   Bill Jones, on behalf of himself and all others
   similarly situated; Jennifer Branch, on behalf of
   herself and all others similarly situated; Laura
   Romero, on behalf of herself and all others similarly
   situated; Melissa Breaux; Ivette M. Perez; Nicole
   Crowder,

                                                          Plaintiffs—Appellants,

                                     versus

   New Orleans Regional Physician Hospital
   Organization, Incorporated, doing business as Peoples
   Health Network,

                                                          Defendant—Appellee.

                 Appeal from the United States District Court
                    for the Eastern District of Louisiana
                          USDC No. 2:17-CV-8817

   Before Higginbotham, Jones, and Higginson, Circuit Judges.
   Edith H. Jones, Circuit Judge:
         The Appellants are former white-collar employees of Appellee
   Peoples Health Network who filed suit for themselves and others alleging
   violations of the Fair Labor Standards Act. Appealing the district court’s
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                                        No. 19-31027

   summary judgment in favor of the employer, they contend principally that
   their job duties did not fall within an administrative employee exemption to
   the statute. See 29 C.F.R. Sec. 541.200(a). Upon careful review of the
   arguments and relevant portions of the record, we AFFIRM.
                                  I. BACKGROUND
          The Plaintiffs filed a purported collective action 1 under the FLSA
   against their former employer, New Orleans Regional Physician Hospital
   Organization, L.L.C. (“Peoples Health”). Peoples Health is a managed care
   company that offers a Medicare Advantage Plan insurance product to eligible
   individuals.     The Plaintiffs claim that Peoples Health intentionally
   misclassified them as “salaried” and “exempt” to avoid paying overtime
   wages. Peoples Health contends that each Plaintiff was administratively
   exempt from the FLSA’s overtime requirements.
          An employee qualifies as administratively exempt if three facts can be
   shown. First, the employee must be compensated on a salary or fee basis at
   a rate that exceeds an amount set by regulation. Second, the employee’s
   primary job duties must involve the performance of office or non-manual
   work directly related to the management or general business operations of
   the employer or its customers. Finally, the employee’s primary job duties
   must include exercising discretion and independent judgment with respect
   to matters of significance. 29 C.F.R. § 541.200(a).
          The six Plaintiffs held three different job titles in two departments at
   Peoples Health: four were Contracting Specialists, one was an Operations
   Specialist, and one was a Pharmacy Part D Specialist.

           1
             Although the district court “conditionally certified” the case as a collective
   action, only six plaintiffs remain.

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          Four Plaintiffs were Contracting Specialists who were responsible for
   signing up physicians and hospital-based providers who wished to join
   Peoples Health’s network. They worked within the Network Development
   Department, which is responsible for establishing and maintaining Peoples
   Health’s network of healthcare providers for plan members. Their core
   function was to recruit healthcare providers, with a focus on the providers
   executing contracts.
          The Operations Specialist was responsible for working on projects
   designed to improve operational processes and efficiencies. Although the
   Plaintiffs recognize that the scope of this position included a broad range of
   activities, they assert that actual execution required consistent direction from
   more senior leaders.
          The Pharmacy Part D Specialist worked within the Pharmacy
   Department, which handles payments to pharmacies for filling members’
   prescriptions. The Pharmacy Part D Specialist’s responsibilities included:
   preparing documentation for Centers for Medicare and Medicaid Services
   (“CMS”) audits; reviewing claims and prescription drug events (“PDEs”);
   and analyzing and researching compliance issues. Although the Plaintiffs
   agree with these general statements of responsibility, they claim that the
   actual tasks performed were ministerial.
          After discovery, the district court granted Peoples Health’s motion
   for summary judgment and found the Plaintiffs administratively exempt from
   the FLSA’s overtime requirement. The Plaintiffs timely appealed.

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                                  II. DISCUSSION
            This court reviews a grant of summary judgment de novo, applying the
   same standard as the district court. Summary judgment is warranted if “the
   pleadings, the discovery and disclosure materials on file, and any affidavits
   show that there is no genuine issue as to any material fact and that the movant
   is entitled to judgment as a matter of law.” Depree v. Saunders, 588 F.3d 282,
   286 (5th Cir. 2009) (internal citations omitted); see FED. R. CIV. P. 56. A
   dispute about a material fact is “genuine” if the evidence is such that a
   reasonable jury could return a verdict for the non-moving party. TIG Ins. Co.
   v. Sedgwick James, 276 F.3d 754, 759 (5th Cir. 2002) (citation omitted). The
   court views all facts and evidence in the light most favorable to the non-
   movant. Johnson v. Diversicare Afton Oaks, LLC, 597 F.3d 673, 675 (5th Cir.
   2010).
            In a non-jury case, such as this one, “a district court has somewhat
   greater discretion to consider what weight it will accord the evidence.” In re
   Placid Oil Co., 932 F.2d 394, 397 (5th Cir. 1991). The district court “has the
   limited discretion to decide that the same evidence, presented to him or her
   as a trier of fact in a plenary trial, could not possibly lead to a different result.”
   Jones v. United States, 936 F.3d 318, 321–22 (5th Cir. 2019) (internal
   quotations omitted).
            The Plaintiffs take issue with each aspect of the district court’s
   adverse conclusions as to each factor necessary to the FLSA administrative
   exemption. They also contend that the court erroneously imbedded findings
   of disputed facts in its summary judgment analysis. We address each of these
   contentions.
   A. Salary Basis
            At the first step of the administrative exemption analysis, see
   29 C.F.R. § 541.200(a), the Plaintiffs assert that Peoples Health did not

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   compensate them on a salary basis, but instead treated them like hourly
   employees. We disagree.
          The district court had ample support from the record to conclude that
   the Plaintiffs were salaried employees. First, the Plaintiffs do not contest that
   Peoples Health paid them enough to far surpass the regulation’s minimum
   weekly wage requirement. These six employees’ annual salaries ranged from
   about $56,000 to over $68,000. Every year, Peoples Health’s human
   resources department reviewed and certified each employee’s job
   description to ensure accuracy and that the employee qualified as FLSA
   exempt. The record contains no evidence that any Plaintiff complained of
   his or her job duties or exempt status during his or her employment.
   Additionally, two of the Plaintiffs testified that they understood that they
   would receive the same, fixed amount of pay each week regardless of their
   hours worked.
          The Plaintiffs point to three types of evidence showing they were
   treated like hourly employees despite Peoples Health’s official designation:
   payroll records, testimony from senior managers, and Peoples Health’s
   failure to follow timekeeping practices. Each argument fails.
          First, payroll records supposedly show instances in which the salary
   of two Plaintiffs was docked in half-day increments. They argue that
   employers may only dock pay for exempt employees in full day increments
   (the “no pay-docking rule”). 29 C.F.R. § 541.602(b)(1). But they do not
   refute evidence that in each instance a deduction was expressly permitted
   notwithstanding the no pay-docking rule.            Specifically, the half-day
   reductions occurred when the Plaintiffs were either about to leave
   employment or on leave pursuant to the Family and Medical Leave Act
   (“FMLA”). The relevant regulations explicitly permit partial payments to
   exempt employees for time worked in the last week of employment and

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   during periods where leave is taken under the FMLA. 2                         29 C.F.R.
   §§ 541.602(b)(6)–(7).
           Second, the Plaintiffs claim that statements from three senior
   managers support their claim that Peoples Health actually paid them as
   hourly employees. In fact, these managers only expressed the belief that
   exempt employees had to use time off (e.g., vacation time) if they worked
   under forty hours in a week. This testimony simply does not help the
   Plaintiffs. As the district court observed, the FMLA (1) does not prohibit an
   employer from requiring its employees to track their attendance at work;
   (2) does not prohibit an employer from requiring a forty-hour workweek from
   a salaried employee; (3) allows for deductions from pay when a salaried
   employee does not work a forty-hour week so long as those deductions are
   not for absences of less than a day; and (4) allows an employer to require
   employees to make up missed time for a partial day or otherwise use
   appropriate leave when not working a full day. See Cowart v. Ingalls Shipbldg.,
   Inc., 213 F.3d 261, 265 (5th Cir. 2000).
           Third, the Plaintiffs argue that Peoples Health violated its written
   timekeeping policy by not permitting salaried employees to record time in
   excess of forty hours per week. Even if this were true, it is not evidence that
   the relevant employees were not treated as exempt, salaried employees.

           2
             Even if Peoples Health did not perfectly comply with the regulations in these
   instances—and we see no evidence that they did not—the examples provided are
   insufficient to show an actual practice of improper deductions. When determining whether
   an actual practice of improper deductions exists, the relevant regulation regards both the
   number of improper deductions and the time period in which they were made as relevant
   considerations. 29 CFR § 541.603.

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   B. Relationship to Management or Business Operations
          The second requirement of the administrative exemption is that the
   employees’ primary job duties must directly relate to the management or
   general business operations of Peoples Health or its customers. See 29 C.F.R.
   § 541.201. Like the district court, we hold this condition was satisfied.
          “The term ‘primary duty’ means the principal, main, major or most
   important duty that the employee performs.” 29 C.F.R. § 541.700(a). This
   does not mean, however, that exempt employees must spend more than fifty
   percent of their time performing exempt work. 29 C.F.R. § 541.700(b).
   “The phrase ‘directly related to the management or general business
   operations’ refers to the type of work performed by the employee. To meet
   this requirement, an employee must perform work directly related to
   assisting with the running or servicing of the business, as distinguished, for
   example, from working on a manufacturing production line or selling a
   product in a retail or service establishment.” 29 C.F.R. § 541.201(a).
   1. Contracting Specialists
          The undisputed duties of Contracting Specialists primarily involve
   recruiting and contracting service providers for the network. The Plaintiffs
   argue that the district court erred in three ways in analyzing the Contracting
   Specialists’ primary job duties. We disagree.
          First, they attempt to analogize the role of the Contracting Specialist
   in Peoples Health’s business model to an employee on a manufacturing
   production line or in retail sales. See Dewan v. M-I, LLC, 858 F.3d 331, 337
   (5th Cir. 2017) (recognizing that the administrative exemption applies to
   employees involved with “administering the business affairs of the
   enterprise, not with producing the commodity of the business” (quotations
   omitted)). But the Contracting Specialists did not write, produce, or sell
   Peoples Health’s product: insurance policies. See Cheatham v. Allstate Ins.

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   Co., 465 F.3d 578, 585 (5th Cir. 2006) (“An insurance company’s product is
   its policies, and Appellants’ duties did not include writing and selling
   insurance.”). Instead, their role was supporting and servicing the company’s
   business operations by maintaining and enlarging its provider network.
          Second, the Plaintiffs assert that the Contracting Specialists’ duties
   do not fall within the officially or traditionally recognized categories of
   general business operations.      See 29 C.F.R. § 541.201(b).       But these
   regulatory categories are illustrative, not exhaustive. Further, as the district
   court recognized, the job duties of Contracting Specialists include activities
   comparable to the listed categories of advertising, marketing, and research.
          Third, the Plaintiffs claim that the district court conflated the
   position’s essentiality with its relation to business operations. This mistake,
   they argue, means that any employee meets the “directly related” standard
   because almost any type of employee is arguably essential. The Plaintiffs’
   argument is an uncharitable reading of the district court opinion, which
   explicitly recognized, as do we, that the work of Contracting Specialists was
   both “directly related to the general business operations of Peoples Health”
   and “essential” to these operations.
   2. Operations Specialist
          The Plaintiffs contend that the Operations Specialist’s job duties do
   not directly relate to the general operations of Peoples Health.           This
   argument has no merit. Those job duties included (1) understanding new
   products and processes, (2) establishing project timelines, (3) coordinating
   activities for new and continuing projects, (4) serving as liaison between
   departments and documenting processes, (5) observing department
   processes and brainstorming potential improvements, and (6) dispensing
   advice to managers on how to improve department processes or workflows.

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   These job duties directly relate to the general business operations of Peoples
   Health.
   3. Pharmacy Part D Specialist
          The Pharmacy Part D Specialist also easily meets the requirements
   under this step of the analysis.           Her job duties were to “prepare
   documentation for CMS audits, review claims [and] PDE’s as well as analyze
   [and] research outlying issues with regards to continual compliance,” and to
   “perform all tasks within CMS guidelines, claims processing guidelines,
   company policies, and state/federal regulatory requirements.” On their face,
   these duties directly relate to the general business operations of Peoples
   Health. In addition, as the district court noted, the job duties of the Pharmacy
   Part D Specialist are comparable to several illustrative categories listed in the
   relevant regulation, including auditing, insurance, quality control, and legal
   and regulatory compliance.
   C. Exercising Discretion and Independent Judgment with Respect to
      Matters of Significance
          Whether the Plaintiffs’ primary job duties included “the exercise of
   discretion and independent judgment with respect to matters of
   significance” is the third factor in the administrative exemption. 29 C.F.R.
   § 541.202(a). To assist in making this determination, 29 C.F.R. § 541.202(b)
   lists several non-exhaustive considerations. Importantly, “employees can
   exercise discretion and independent judgment even if their decisions or
   recommendations are reviewed at a higher level.” 29 C.F.R. § 541.202(c).
   Thus, an employee need not exercise final decision-making authority to fulfill
   the regulation’s standard. Lott v. Howard Wilson Chrysler-Plymouth, Inc.,
   203 F.3d 326, 331 (5th Cir. 2000). The employee does, however, need to
   exercise more discretion “than the use of skill in applying well-established
   techniques, procedures or specific standards described in manuals or other

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   sources.” 29 C.F.R. § 541.202(e). The district court rejected Plaintiffs’
   arguments that each of their positions lacks sufficient discretion and
   independent judgment.
   1. Contracting Specialists
           The Contracting Specialists’ primary job duties included the exercise
   of discretion and independent judgment with respect to matters of
   significance. As one of the Plaintiffs explained, his job as a Contracting
   Specialist included building relationships, explaining why prospective
   members should join the network, and implementing a “thoughtful well-
   planned strategy.” The Plaintiffs do not meaningfully disagree that their
   work included identifying, communicating and networking with, and
   recruiting providers. These duties required the exercise of discretion and
   independent judgment regarding the significant, even essential, matter of
   maintaining Peoples Health’s provider network.
           Nevertheless, the Plaintiffs assert that Contracting Specialists did not
   exercise discretion and independent judgment. Specifically, they argue that:
   (1) Supervisors identified market needs and final decisions were made by the
   Contract Committee; (2) Contracting Specialists had no independent
   authority to resolve issues with service providers; (3) Contracting Specialists
   used contract templates provided and approved by the legal department;
   (4) Contracting Specialists lacked discretion to develop individualized sales
   pitches; and (5) Contracting Specialists had no independent authority to
   manage projects. 3 As the relevant regulation makes clear, these arguments

           3
             Note, however, that a close review of the record shows evidence of more
   responsibility than the Plaintiffs suggest. For instance, one of the Plaintiffs admits to
   researching companies’ provider information and working to determine additional
   information about hospital groups. And one of the supervisors stated that the Contracting
   Specialists “could dictate of [sic] how things are going to flow.”

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   are unavailing: “The decisions made as a result of the exercise of discretion
   and independent judgment may consist of recommendations for action rather
   than the actual taking of action. The fact that an employee’s decision may be
   subject to review and that upon occasion the decisions are revised or reversed
   after review does not mean that the employee is not exercising discretion and
   independent judgment.” 29 C.F.R. § 541.202(c). We further agree with the
   district court that the Contracting Specialists meet the requirements under
   this step of the analysis even though they “did not have the final authority to
   negotiate and execute a binding contract.”
   2. Operations Specialist
          The evidence confirms that the Operations Specialist was essentially
   an internal consultant within Peoples Health and acted with enough
   discretion and independent judgment to satisfy this step of the analysis. 4 The
   Plaintiffs acknowledge that the Operations Specialist’s role included working
   on productivity improvements, developing and documenting policies and
   procedures, and reviewing regulatory specialist guides and converting them
   into processes for other departments. Notably, the regulation specifically
   references a management consultant to illustrate job duties that lack final
   authority but nevertheless involve discretion and independent judgment.
   29 C.F.R. § 541.202(c).

          4
             The Operations Specialist described her own role as “assessing need, making
   recommendations to change current processes or creating new processes, creating
   strategies to remediate need, and executing approved strategies under the direction of
   [various managers].” A supervisor also spoke highly of her, claiming she was “a real key
   person on developing” an important project who “would probably be making some very
   good recommendations” and “presenting her work.”

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   3. Pharmacy Part D Specialist
          The Pharmacy Part D Specialist also meets the requirements at this
   step of the analysis. Her job duties were indisputably important, and she
   acknowledged her own exceptional performance and limited supervision.
   She described her job responsibilities as including problem solving, data
   analysis, and maintaining the integrity of data. And she certainly acted
   independently when reviewing CMS rejections and resolving PDEs. The
   district court correctly concluded that the Pharmacy Part D Specialist
   exercised discretion and independent judgment with respect to matters of
   significance.
   D. District Court’s Standard of Review
          Having concluded de novo that the evidence creates no genuine issue
   of material fact and thus supports the district court’s grant of summary
   judgment, we also conclude that the district court applied the correct
   standard of review.
          The district court recites the preponderance of the evidence standard
   eight times in its decision. The Plaintiffs construe this to mean that the
   district court did not apply the summary judgment standard. But the court
   made clear in its conclusion that it was applying the summary judgment
   standard to Peoples Health’s burden of proving the administrative
   exemption by a preponderance of the evidence. The Plaintiffs conceded at
   oral argument that, if the case were remanded for a bench trial, they would
   have no additional evidence to present to the judge that the district court has
   not already considered and found wanting. Based on the evidence already
   presented, to the extent that it “could support more than one inference,” the
   district court has already concluded that it “could not possibly lead to a
   different result” at trial.

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           The Plaintiffs imply that the district court “fell into serious error” by
   referring in its decision to evidence presented in one Plaintiff’s separate
   retaliation case against Peoples Health. But the Plaintiffs do not explain why,
   beyond their mere assertion of impropriety, this is a serious error. 5 More
   important, the record in this case, which was cited throughout the district
   court opinion, independently establishes the facts necessary to grant
   summary judgment to Peoples Health.
                                  III. CONCLUSION
           Based on the foregoing, we AFFIRM the district court’s grant of
   summary judgment to Peoples Health.

           5
           They do not claim, for example, that information from the retaliation case would
   be inadmissible at trial.

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