By Alan B. Morrison, Lerner Family Associate Dean for Public Interest & Public Service, George Washington University Law School. The writer did an unpaid moot court for plaintiffs’ counsel in the case discussed in this essay.
In Christopher v. SmithKline Beecham (No. 11-204, decided June 18, 2012), the Supreme Court had to decide whether individual plaintiffs who were detailers for drug companies were exempt from the overtime provisions of the Fair Labor Standards Act (FLSA), which do not apply to workers employed “in the capacity of outside salesmen.” The relevant facts were undisputed and also appear to be unique to this industry. There is an interesting administrative law issue relating to whether the interpretation of the Department of Labor, which enforces the FLSA, should be given deference, but what caught my eye was the battle between the literalists and the pragmatists and how it came out in this case.
The job of a drug detailer is to persuade doctors to prescribe the prescription drugs sold by their company to their patients in appropriate situations. By law, those drugs can only be purchased from a licensed pharmacy, with a doctor’s prescription, and the actual sales of the drugs are made by the manufacturer (the employer of the detailer) to the pharmacy, but never to a doctor or a patient directly. Detailers are paid good salaries, plus a modest bonus that is loosely determined by the sales of the drugs in their territory. The individual plaintiffs earned in excess of $70,000 per year and the industry average is above $90,000. They regularly work between 10-20 hours a week above the 40 hours, after which they would be entitled to overtime. Their work is almost always out of the office, and no one supervises them on a daily basis.
The issue the Court had to decide was whether these plaintiffs (and nearly 90,000 others in the industry who work in virtually identical arrangements) are exempt from the overtime law because they are outside salesmen. At stake was potentially millions of dollars in unpaid overtime for whatever period was not barred by the statute of limitations. The companies could probably restructure their pay systems in the future to minimize the impact, by reducing salaries or bonuses to offset any anticipated overtime, but they would prefer not to have to do that.
Looking at the statute, the plaintiffs argued, and one group of Justices agreed, that the law applies only to “salesmen,” and the detailers did not sell anything to doctors or for that matter to anyone else. The most that they could get from a visit to a doctor was a “non-binding commitment,” which ones of the Justices characterized as a “definite maybe,” but surely not a sale. The law also defined sale quite broadly, although it did include a “consignment for sale,” as well as “other disposition,” which suggest some flexibility. Plaintiffs’ response was that the definition was not broad enough to include an employee who never makes a sale and who deals with only people – doctors – who never buy the product that is eventually sold.
On the other side, the defendant and the Justices who agreed with it made arguments of a very different kind. First, the Justices pointed to the functions that the detailers perform, their continued absence from the office while doing their work, and the lack of a ready means of keeping track of their time by anyone else. For those reasons, the detailers look just like the salesmen who are clearly covered by the exception. The fact that they don’t actually close a sale should be irrelevant in terms of the purposes of the exemption, so far as they can be determined. Second, the FLSA and its overtime provisions are meant to prevent employers from taking unfair advantage of individuals who cannot fend for themselves. Detailers are educated and well-compensated, and they do not need the protections of overtime law. And thrown in with these arguments was a concern of how difficult it would be to administer overtime rules, including extensive record-keeping, for individuals who are never in the office and have no time clock to punch.
Which side has the better of the argument is of no great moment. In the end, the literalists, who sided with the plaintiffs, lost in a 5-4 ruling that would be unremarkable except for the Court’s lineup. Writing for the functional and purpose-driven outcome was Justice Samuel Alito, joined by three other strict constructionists – Chief Justice John Roberts and Justices Antonin Scalia and Clarence Thomas – and Justice Anthony Kennedy who often takes the literal approach to statutes. Indeed, in this very term of Court, with Justice Alito writing in FAA v. Cooper, 132 S. Ct. 1441 (2012), these same five Justices construed the Federal Privacy Act’s remedial provision to essentially obliterate the right to sue for damages. And it did the same thing in a unanimous opinion by Justice Scalia in Freeman v. Quicken Loan, 132 S. Ct. 2034 (2012), relying on a literal reading of the Real Estate Settlement Procedures Act to bar a suit by homebuyers under that law based on a claim that the company charged for services it never provided.
On the other side, Justice Stephen Breyer, who almost always wants to know about a statute’s purposes and what the effects of a ruling will be, took the literal approach and concluded that, because the detailers did not sell anything to anyone, they fell outside the exception. He was joined by the other three “liberal” Justices who often follow his approach to statutory construction, although none of them thought that those factors had any relevance in this case – perhaps because they thought the statute was so clear.
There is one other possible explanation for this radical shift in approaches among the two groups of Justices: this is a case between employees and corporations. And, as I have written elsewhere for ACS, Saved by the Supreme Court: Rescuing Corporate America, 5 Advance 5 (2011), the five member conservative majority of the Court has a very strong record of voting for corporations when the chips are down. It is pretty hard to see how those who read statutes literally could come out the way that they did in Christopher unless something else was motivating them.
[image via Wikimedia Commons]