Blahnik et al v. Box Office Ticket Sales, LLC et al
MEMORANDUM Opinion and Order Signed by the Honorable John Z. Lee on 3/28/17. Mailed notice(ca, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
PAUL BLAHNIK and ADDISON
POPPAS, individually and for all
others similarly situated,
BOX OFFICE TICKET SALES, LLC,
TICKETS IN TIME, LLC, JOHN
URICH, and HOWARD SCHWARTZ,
15 C 4735
Judge John Z. Lee
MEMORANDUM OPINION AND ORDER
Plaintiffs Paul Blahnik (“Blahnik”) and Addison Poppas (“Poppas”) (together,
“Plaintiffs”) brought a class action suit against Defendants Box Office Ticket Sales,
LLC, Tickets in Time, LLC, John Urich, and Howard Schwartz (“Defendants”).
They claim that Defendants failed to pay them overtime as required by the Fair
Labor Standards Act (FLSA), 29 U.S.C. § 207 et seq.
Mosansky (“Mosansky”)—opted in to Plaintiffs’ class. Defendants have now moved
for partial summary judgment, arguing they should be exempt from the FLSA’s
overtime pay requirements except in relation to Poppas’s employment from 2014
through 2015. For the reasons that follow, Defendants’ motion  is granted.
Box Office Ticket Sales (“BOTS”) is the trade name for an online ticket broker
that at all relevant times sold event tickets to consumers. Defs.’ LR 56.1(a)(3) Stmt.
¶ 4, ECF No. 41. Among BOTS’s offerings were tickets to concerts, sporting events,
and the theater. Id.; Pls.’ LR 56.1(b)(3)(C) Stmt. ¶ 2, ECF No. 48. 2 When customers
Ticketmaster and StubHub for tickets to the requested events, purchased them
using a company card, and then charged and sent them to the customers. Pls.’ LR
56.1(b)(3)(C) Stmt. ¶¶ 22–24.
Blahnik, Poppas, and Mosansky each worked for
BOTS as sales representatives. Id. ¶¶ 1–2. Blahnik worked for BOTS from July
2013 through July 2015, Poppas from February 2013 through June 2014 and again
from November 2014 through April 2015, and Mosansky from October 2012 through
July 2013 and again from March 2014 through December 2014. Defs.’ LR 56.1(a)(3)
Stmt. ¶¶ 6–8.
During their employment at BOTS, Plaintiffs regularly worked 45 hours per
week, Pls.’ LR 56.1(b)(3)(C) Stmt. ¶¶ 16–17, although they in some instances
worked more, Defs.’ LR 56.1(a)(3) Stmt. ¶¶ 10–12. They were compensated by a
base salary of $35,000, bonuses, and commissions based on ticket sales they made.
The following facts are undisputed except where noted.
Defendants did not respond to Plaintiffs’ statement of additional facts under Local
Rule 56.1. Pursuant to that rule, “[a]ll material facts set forth in the [non-moving party’s]
statement filed pursuant to section (b)(3)(C) will be deemed admitted unless controverted
by the statement of the moving party.” LR 56.1(a). Thus, all of Plaintiffs’ additional facts
are deemed admitted for the purposes of this motion. Jang v. Woo Lae Oak, Inc. Chi., No.
12-CV-00782, 2013 WL 6577027, at *2 n.1 (N.D. Ill. Dec. 12, 2013).
Id. ¶ 9; Pls.’ LR 56.1(b)(3)(C) Stmt. ¶ 13. They were not paid overtime. Pls.’ LR
56.1(b)(3)(C) Stmt. ¶ 14.
Their hourly rate of compensation and percentage of compensation based on
commissions are relevant to their claims in this case. During Blahnik’s period of
employment, his base salary provided him a rate of compensation of at least $16.28
per hour. Defs.’ LR 56.1(a)(3) Stmt. ¶ 14. Additionally, commissions comprised at
least 55.05% of his total compensation during the years he worked for BOTS. Id.
Poppas’s base salary provided him a rate of compensation of at least $12.57
per hour during his employment in 2013. Id. ¶ 15. During that year, commissions
comprised 50.89% of his total compensation.
Id. ¶ 17.
Mosansky’s base salary
provided him a rate of compensation of more than $14.00 per hour.
Id. ¶ 13.
Commissions comprised at least 56.72% of his total compensation during his years
at BOTS. Id. ¶ 18.
Plaintiffs state that, while working at BOTS, Defendant John Uhrich—
BOTS’s CEO—“created a companywide policy of refusing to sell tickets to African
Pls.’ LR 56.1(b)(3)(C) Stmt. ¶¶ 16, 26. 3
instructed Plaintiffs to “hang up the phone whenever a person sounded African
American or had an African-American name, especially if that person requested
It bears repeating that Defendants did not respond to the facts in this paragraph as
required by Local Rule 56.1, and they are therefore admitted for the purposes of this
motion. Additionally, contrary to Defendants’ suggestion, Plaintiffs’ evidence in support of
these facts is not hearsay. Defs.’ Reply 8, ECF No. 54. Plaintiffs rely on Uhrich’s out-ofcourt statements in their affidavits, but Uhrich’s statements are admissions by a party
opponent and thus are not hearsay. Fed. R. Evid. 801(d)(2).
tickets to an event with a predominantly African-American audience (e.g., rap
concerts and NBA games).”
Pls.’ LR 56.1(b)(3)(C) Stmt. ¶ 27.
Later, “due to
African-Americans calling back after being hung up on,” Uhrich instructed
Plaintiffs to “quote African-American callers ticket prices so highly-inflated that no
reasonable person would purchase a ticket.” Id. ¶ 28.
“The court shall grant summary judgment if the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). To survive summary judgment, the
nonmoving party must “do more than simply show that there is some metaphysical
doubt as to the material facts,” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986), and instead must “establish some genuine issue for trial
such that a reasonable jury could return a verdict in her favor.” Gordon v. FedEx
Freight, Inc., 674 F.3d 769, 772–73 (7th Cir. 2012).
In reviewing a motion for
summary judgment, the Court gives the nonmoving party “the benefit of conflicts in
the evidence and reasonable inferences that could be drawn from it.” Grochocinski
v. Mayer Brown Rowe & Maw, LLP, 719 F.3d 785, 794 (7th Cir. 2013). The Court
must not make credibility determinations or weigh conflicting evidence. McCann v.
Iroquois Mem’l Hosp., 622 F.3d 745, 752 (7th Cir. 2010).
Defendants have moved for partial summary judgment as to Plaintiffs’ FLSA
overtime claims based on the “Commission Salespersons” exemption found in 29
U.S.C. § 207(i). Defs.’ Mem. Supp. Summ. J. 2, ECF No. 42. Under this provision,
employers are exempt from the FLSA’s overtime pay requirements as to certain
employees where three conditions are met: (1) the employer must operate (and the
employee must work at) a “retail or service establishment”; (2) the regular rate of
pay for such an employee must exceed one and one-half times the applicable
minimum hourly rate; and (3) more than half of the employee’s compensation for a
representative period of at least one month must come from commissions on good or
services. 29 U.S.C § 207(i); see Alvarado v. Corp. Cleaning Servs., Inc., 782 F.3d
365, 366 (7th Cir. 2015).
In moving for summary judgment, it is Defendants’ burden to establish that
the § 207(i) exemption applies. Laouini v. CLM Freight Lines, Inc., 586 F.3d 473,
475 (7th Cir. 2009) (explaining that a defendant moving for summary judgment on
the basis of an affirmative defense carries the burden of establishing the defense).
Here, there are no genuine disputes of material fact, and in any case, whether the
exemption applies is a question of law for the Court to decide. See Roe-Midgett v.
CC Servs., Inc., 512 F.3d 865, 869 (7th Cir. 2008) (citing Icicle Seafoods, Inc. v.
Worthington, 475 U.S. 709, 714 (1986)) (“Determining the duties encompassed by an
employee’s position is a question of fact; determining the appropriate FLSA
classification is a question of law.”); see also Bitner v. Wyndham Vacation Resorts,
Inc., No. 13-CV-451-WMC, 2016 WL 7480428, at *17 (W.D. Wis. Dec. 29, 2016)
(stating that whether a defendant is a retail or service establishment under § 207(i)
is a question of law). Moreover, the Seventh Circuit has stated that the § 207(i)
exemption is to be construed against an employer trying to assert it, but only as a
tie-breaker in a close case. Mechmet v. Four Seasons Hotels, Ltd., 825 F.2d 1173,
1177–78 (7th Cir. 1987).
Defendants start by arguing that the second and third conditions for the
§ 207(i) exemption are satisfied.
According to their calculations, Plaintiffs each
received a regular rate of pay that exceeded one and one-half times the applicable
minimum wage (which is $12.38 per hour) during the relevant time periods, and
Plaintiffs each received total earnings in the relevant years more than half of which
were made up of commissions. Defs.’ Mem. at 5–8; Defs.’ LR 56.1 Stmt. ¶¶ 13–18.
Plaintiffs do not contest these calculations, Pls.’ Resp. Defs.’ LR 56.1(a)(3) Stmt.
¶¶ 13–18, ECF No. 47, nor do they dispute that Defendants have satisfied the
second and third requirements of § 207(i).
Instead, Plaintiffs focus their arguments on the first requirement: whether
BOTS constitutes a “retail or service establishment.” They argue it does not for
First, Plaintiffs contend that they worked regular hours, which
precludes BOTS from being categorized as a “retail or service establishment.” Pls.’
Mem. Opp. Summ. J. 7–10, ECF No. 49. Second, Plaintiffs direct the Court to
guidance from the Department of Labor (“Department”) stating that a travel agency
lacks a “retail concept.” Id. at 10 (citing 29 C.F.R. § 779.317). Reasoning that
BOTS’s business is “functionally no different from that of a travel agent,” Plaintiffs
argue that BOTS— like a travel agency—is not a retail establishment. Id. at 11.
Finally, Plaintiffs argue that BOTS’s purported policy of not selling tickets to
African-Americans demonstrates that its business was not open to the general
public, another necessary element for a retail establishment under Department
regulations. Id. at 11–12 (citing 29 C.F.R. § 779.319). The Court will address each
of these arguments in turn.
Plaintiffs’ Regular Work Hours
Plaintiffs first argue BOTS did not require irregular hours, which they
contend is a necessary prerequisite to classifying BOTS as a retail establishment.
In support, they rely primarily on the Seventh Circuit’s decision in Alvarado v.
Corporate Cleaning Services, Inc., 782 F.3d 365 (7th Cir. 2015). Alvarado concerned
window washers who, like Plaintiffs, sought overtime pay under the FLSA from
their employer, which specialized in window-washing services for high-rise
commercial and apartment buildings.
Id. at 366.
The employer, like BOTS,
asserted it should be exempt under § 207(i). Id. The window washers disagreed,
arguing that they were not paid on a commission basis and that their employer was
not a retail or service establishment. Id.
The Seventh Circuit first concluded that the window washers were paid on a
Id. at 367–69.
In reaching this determination, the court
analyzed the window washers’ compensation structure, finding that “the window
washers [were] paid only if there’s been a sale,” which constituted a commission
system. Id. at 367. The court then noted the “more important consideration . . .
that commission-compensated work involves irregular hours of work.” Id. at 368.
This consideration is important, the court explained, because it underlies the
rationale for the FLSA’s exemption for commission workers in § 207(i): to avoid a
windfall for workers whose hours are irregular but generally equivalent to those
worked by non-commission workers. Id. at 369. To that end, the court explained
that the window washers worked irregular hours due to the nature of their
business, which was dependent on weather, light, and other environmental factors.
Id. at 368–69. But if the window washers were to receive overtime pay during the
peak of their irregular hours, the court reasoned, they would receive a windfall as
compared to non-commission workers that worked an equivalent number of hours
on a regular basis. Id. at 369. The court therefore found the workers were paid on
a commission basis. Id.
As such, the Seventh Circuit’s discussion of irregular hours was in the
context of deciding whether the pay was commission-based. The Seventh Circuit
then moved on to consider whether the employer was a retail or service
establishment. Id. at 369. For various reasons that the Court discusses in more
detail below, the Seventh Circuit found that the window-washing company was. Id.
at 369–72. But nowhere in this discussion did the court link the working of regular
hours to classification of the employer as a retail or service establishment. 4
Furthermore, as Defendants point out, there are numerous retail or service
industries that compensate salespersons on a commission basis, yet still require
The court did note at one juncture, in criticizing an amicus curiae brief filed by the
Department, that “[n]owhere does the Department engage with the primary reason for
treating [the defendant’s] window washers as commission workers—their irregular hours.”
Id. at 371. But this reference by its terms relates only to the exemption’s requirement of
commission-based pay, and in any event, it was part of a broader critique that the
Department’s regulations are divorced from § 207(i)’s underlying purposes. Id.
them to maintain regular hours, including department stores, beauty shops, jewelry
stores, and clothing stores. In fact, the Alvarado court specifically referenced a shoe
salesman, who is paid per pair of shoes he sells, as an example of someone who
works on a commission basis. Id. at 367. Therefore, requiring employees to work
irregular hours is not a necessary prerequisite to finding that an employer is a
retail or service establishment under § 207(i).
“Retail Concept” Establishments
Plaintiffs next argue that BOTS cannot constitute a retail establishment
because it is akin to a travel agency, which the Department has indicated lacks a
“retail concept.” This argument arises from regulations that the Department has
promulgated in relation to § 207(i). One such regulation provides a “[p]artial list of
establishments lacking [a] ‘retail concept.’” 29 C.F.R. § 779.317. 5 The list includes
a series of different establishments, from armored car companies to detective
agencies to wrecking contractors; it also includes travel agencies. Id. § 779.317.
Plaintiffs argue that, because BOTS’s employees speak with customers by phone,
find tickets for them, and purchase tickets on their behalf, they are equivalent to
travel agents who work at travel agencies. Thus, at least according to Plaintiffs,
BOTS cannot be a retail establishment under § 207(i).
This argument is faulty for two reasons.
First, the Seventh Circuit in
Alvarado severely questioned the persuasive value of the Department’s list of
industries in § 779.317. In holding that the window-washing company was a “retail
In the preceding regulation, the Department states that a retail establishment must
possess a “retail concept,” but does not define the term. Id. § 779.316.
service establishment,” the court explained that the company “sells its windowcleaning services to building owners and managers; they are the ultimate
customers; they do not resell the window cleaning, and therefore [the company] is
not a wholesaler.”
Alvarado, 782 F.3d at 369.
Thus, the court focused on the
distinction between retailers and wholesalers to define what constitutes a “retail
establishment” for the purposes of § 207(i). Id. at 369–70. The court also found it
significant that, by offering window washing by the building, the company used “the
unit of sale recognized in the industry,” rather than bundling smaller units and
selling them wholesale. Id. at 370. In the eyes of the court, the Department failed
to consider either of these factors or the general purposes of § 207(i) when compiling
the list contained in § 779.317. Id. at 370–71. Thus, the Alvarado court found the
list to be an “incomplete, arbitrary, and essentially mindless catalog,” and the term
“retail concept” an undefined, unilluminating phrase. Id. 6
Consistent with the approach in Alvarado, the Court too will focus on
whether BOTS acted as a retailer—as opposed to a wholesaler—within the ticket
resale market. Here, Plaintiffs acknowledge in their statement of facts that BOTS
sold tickets directly to end user customers, Pls.’ LR 56.1(b)(3)(C) ¶¶ 2, 22–24, and
The Seventh Circuit did not discuss whether the Department’s list and other
regulations in interpreting § 207(i) should be given deference under Chevron U.S.A., Inc. v.
Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), or Skidmore v. Swift & Co.,
323 U.S. 134 (1944). The implication of the court’s reasoning, however, is that the
Department’s list is arbitrary and capricious and thus is not entitled to Chevron deference.
Other courts have reached the same conclusion regarding the Department’s inclusion of
travel agency in its partial list of non-retail establishments. Reich v. Cruises Only, Inc., No.
95-660-CIV-ORL-19, 1997 WL 1507504, at *5 (M.D. Fla. June 5, 1997); see also Rodriguez v.
Home Heroes, LLC, No. 8:13-CV-2711-T-26AEP, 2015 WL 668009, at *6 n.54 (M.D. Fla.
Feb. 17, 2015) (collecting cases).
they do not suggest that BOTS’s customers purchased tickets in order to resell
them. Nor have Plaintiffs suggested that BOTS, by selling individual tickets to
individual events, dealt in units that are not recognized in the retail ticket sales
industry. Based upon these undisputed market characteristics, the Court finds that
BOTS qualifies as a retail establishment under the reasoning in Alvarado. 7
Openness to the General Public
Plaintiffs’ final argument is that BOTS allegedly refused to sell tickets to
African-Americans and, thus, was not open to the general public as required by
Department regulations during the period in which Plaintiffs were employed.
Section 779.318(a) states, in part, that “[t]ypically a retail or service establishment
is one which sells goods or services to the general public,” 29 C.F.R. § 779.318(a),
while § 779.319 proves that “an establishment . . . will not be considered a retail or
service establishment . . . if it is not ordinarily available to the general consuming
public,” id. § 779.319. Relying on these provisions, Plaintiffs maintain that being
open to the general public “requires a company to service all customers that seek to
pay them for their service.” Pls.’ Mem. Opp. at 12. According to Plaintiffs, because
BOTS refused to sell to African-Americans, it was not open to the general public.
Alvarado also noted various other purposes animating the FLSA’s overtime
requirements. These include “spread[ing] out full-time work among different employees,”
“reduc[ing] workplace injuries stemming from fatigue,” and providing more pay for lowwage workers. 782 F.3d at 371. Insofar as these purposes are relevant to defining a “retail
establishment,” there is no reason to think BOTS should not be classified as a retail
establishment. There is no indication from the record that BOTS provided an unsafe work
environment or that Plaintiffs received low wages. And while Plaintiffs maintain that they
regularly worked over 45 hours a week, Pls.’ LR 56.1(b)(3)(C) ¶ 17, this alone is not reason
enough to refuse to classify BOTS as a retail establishment.
This argument has some superficial appeal.
A charge that a company
engages in blatantly discriminatory practices is serious indeed. And if BOTS did
discriminate against African-American customers, such reprehensible conduct is
actionable under any number of federal and state statutes. E.g., 42 U.S.C. § 1981;
775 Ill. Comp. Stat. 5/5-102. But the alleged misconduct has little to do with
whether BOTS, as a business, was a retail establishment under § 207(i) for the
purposes of the FLSA.
As an initial matter, the Seventh Circuit in Alvarado specifically questioned
the Department’s rationale for promulgating 29 C.F.R § 779.318, noting that “[w]e
don’t see the connection between these criteria and the reasons for excusing certain
employers from the overtime provision of the [FLSA].” Alvarado, 782 F.3d at 371.
Furthermore, the fact that BOTS may have excluded (illegally or not) a certain
segment of the retail market does not preclude a finding that BOTS acted generally
as a retail establishment in the ticket resale market. See id. (noting that “many
retailers sell to narrow segments of the public: think of sellers of hospital supplies,
or of judges’ robes, or of body bags”). After all, if BOTS did refuse to sell tickets to
African-Americans, it was acting in its capacity as a ticket retailer in doing so.
Plaintiffs fail to explain how such conduct would automatically transform BOTS
from a ticket retailer into a wholesaler.
In the end, while barring discrimination based on race is an important goal of
many federal and state statutes, it is not the purpose behind the enactment of the
FLSA or the retail establishment exemption under § 207(i). Accordingly, Plaintiffs’
argument that BOTS cannot be a retail establishment under 207(i) because it
allegedly refused to sell tickets to African-American retail customers has no force.
For the foregoing reasons, Defendants have demonstrated that all three
conditions for the § 207(i) exemption have been met.
Their motion for partial
summary judgment  is therefore granted.
IT IS SO ORDERED.
John Z. Lee
United States District Judge
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