Otten v. Morgan Stanley Smith Barney LLC
OPINION. Signed by Judge William J. Martini on 2/28/17. (gh, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
IN RE MORGAN STANLEY SMITH
BARNEY LLC WAGE AND HOUR
Civ. No. 2:11-3121
WILLIAM J. MARTINI, U.S.D.J.:
Plaintiffs Jimmy Kuhn, Nick Pontilena, Howard Rosenblatt and Denise Otten
(collectively “Plaintiffs”) bring this putative collective action under the Fair Labors
Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and three putative wage and hour class
actions against Defendants Morgan Stanley Smith Barney LLC and Morgan Stanley & Co.,
Inc. (together “MSSB”). This matter comes before the Court on MSSB’s motion for
summary judgment pursuant to Federal Rule of Civil Procedure 56 and Plaintiffs’ motion
to strike portions MSSB’s response to Plaintiffs’ counterstatement of facts. There was no
oral argument. Fed. R. Civ. P. 78(b). For the reasons set forth below, MSSB’s motion for
summary judgment is GRANTED and Plaintiffs’ claims are DISMISSED WITH
PREJUDICE. Plaintiffs’ motion to strike is DENIED as moot.
MSSB is a financial services firm focused on providing financial advisory services
and selling various investment products to a large and diversified clientele. See Op. 1, ECF
No. 146. Plaintiffs worked for MSSB for varying durations as Financial Advisors (“FAs”).
On May 31, 2011, Plaintiff Pontilena filed a class and collective action complaint in this
Court, alleging that MSSB violated the FLSA by failing to pay overtime wages, and that it
violated New Jersey law by failing to pay overtime wages, making impermissible
deductions from employees’ wages and failing to maintain records. See Compl. ¶¶ 49–90,
ECF No. 1. This Court subsequently consolidated Pontilena’s claims with similar claims
emanating from Connecticut, New York and Rhode Island, creating a multidistrict class
and collective action against MSSB, alleging ten counts in violation of the FLSA and
various state labor laws. See Order, ECF No. 15; Am. Compl. ¶¶ 60–160, ECF No. 17.
During the ensuing litigation, the Court dismissed all of Plaintiffs’ claims except for the
FLSA overtime claim and the Connecticut, New Jersey and New York overtime claims.
See Ops., ECF Nos. 31, 56, 75; Third Am. Compl. (the “Complaint”) ¶¶ 53–80, 91–115,
ECF No. 74. On April 11, 2016, the Court denied Plaintiffs’ motion for class action and
conditional collective certification. See ECF No. 146. Consequently, Plaintiffs’ individual
overtime claims are all that remain before the Court.
MSSB now moves for summary judgment on Plaintiffs’ remaining overtime claims,
arguing: (1) the FLSA claim fails because Plaintiffs satisfied the administrative exemption
(hereinafter “the Exemption”), see Defs.’ Mem. of Points & Authorities in Supp. of Mot.
for Summ. J. (“Defs.’ Mem.”) 9–26, ECF No. 155-1; (2) Plaintiffs Otten, Pontilena and
Kuhn also satisfied the highly compensated exemption, see id. at 26–28; (3) Plaintiffs
Pontilena and Kuhn’s FLSA claims are time barred, see id. at 28–29; and (4) the
administrative exemptions under the three state laws mirror the FLSA and Plaintiffs are,
therefore, exempt under state law for the same reasons as they are under the FLSA, see id.
at 29–30. Plaintiffs oppose the application of the Exemption, countering that genuine
issues of material fact exist as to the following: (1) whether Plaintiffs were paid the required
minimum salary of $455 per week, see Pls.’ Opp’n to Defs.’ Mot. for Summ. J. (“Pls.’
Opp’n”) 4–6, ECF No. 159; (2) whether Plaintiffs’ primary duty at MSSB was the
performance of office or non-manual work directly related to MSSB’s management or
general business operations, see id. at 6–36; and (3) whether Plaintiffs exercised discretion
and independent judgment to significant matters, see id. at 36–39. Plaintiffs also contest
MSSB’s other claims concerning the highly compensated exemption, the statute of
limitations, and the state labor laws at issue. See id. at 39–43. MSSB filed a reply brief on
December 15, 2016. See Defs.’ Reply in Supp. of Mot. for Summ. J. (“Defs.’ Reply”),
ECF No. 161. Shortly thereafter, Plaintiffs’ filed a separate motion to strike portions of
MSSB’s objections to Plaintiffs’ counterstatement of facts. See Pls.’ Mot. to Strike, ECF
No. 162. The Court will address both motions in the instant opinion.
The record before the Court consists primarily of deposition testimony given by the
Plaintiffs and MSSB’s corporate representative, MSSB’s responses and objections to
Plaintiffs’ requests for admission, MSSB internal documents and emails, Plaintiffs’ pay
stubs and tax documents, and two third-party news articles. See Decls., ECF Nos. 155-4,
156-2 (filed under seal), 160, 161-2. The parties purport to disagree over which facts are
in dispute, but the Court finds that their disagreements mainly concern the legal
significance of the facts and not what the facts actually are. After full review of the record,
the Court finds the following facts to be relevant and undisputed:
1. At all relevant times, Plaintiffs maintained a Series 7 license as required by the
Financial Industry Regulatory Authority (“FINRA”). Pls.’ Counterstatement of
Material Facts Not in Dispute (“Pls.’ Counterstatement”) ¶¶ 7–10, ECF No. 159-1.
2. At all relevant times, Plaintiffs complied with FINRA Rule 2090, Know Your
Customer (the “KYC Rule”), with respect to the establishment of new client
accounts and management thereafter. Id. at ¶ 11; Otten Dep. 53:18–24; Pontilena
Dep. 33:14–35:9; Kuhn Dep. 66:14–22; Rosenblatt Dep. 82:6–18.
3. In compliance with the KYC Rule, Plaintiffs engaged each new client in the
following manner: ascertained and analyzed the client’s financial status; discussed
the client’s financial goals, risk tolerance and overall knowledge of the financial
industry; evaluated the client’s entire financial picture in light of the information
received, including performing an asset allocation analysis; identified specific
financial products that best fit the client’s specific needs; made investment
recommendations to the client; and, upon client’s direction, invested assets
accordingly. Otten Dep. 54:14–58:22; Pontilena Dep. 35:10–40:1; Kuhn Dep.
69:5–73:15; Rosenblatt Dep. 81:1–82:18.
4. In compliance with the KYC Rule, Plaintiffs also monitored their existing clients’
accounts on a continual basis to ensure that performance met expectations and
altered investment strategies as necessary to respond to their clients’ changing
needs. Otten Dep. 78:15–79:15; Pontilena 40:2–41:8; Kuhn Dep. 71:8–72:6;
5. In making investment recommendations, Plaintiffs provided their clients with
multiple options with which to invest, often selecting from hundreds of financial
products provided by MSSB based on each client’s financial picture. See Otten
Dep. 58:4–22; Pontilena Dep. 38:3–12; Kuhn Dep. 72:18–73:15, 75:6–7; Rosenblatt
6. Plaintiffs researched economic developments, market movements and other current
events to help inform the recommendations they made to their clients. Otten Dep.
58:18–22, 59:24–61:1; Pontilena Dep. 70:25–71:12; Kuhn Dep. 79:20–80:8;
Rosenblatt Dep. 100:4–10.
7. Plaintiffs made their investment recommendations in the best interest of their
clients. Otten Dep. 58:14–17; Pontilena Dep. 38:13–23; Kuhn Dep. 67:12–18;
Rosenblatt Dep. 102:3–9.
8. Plaintiffs never spent more than one hour of their time during a work-day executing
purchases and sales for their clients’ portfolios. Otten Dep. 159:13–160:14;
Pontilena Dep. 75:6–76:14; Kuhn Dep. 86:16–87:11; Rosenblatt Dep. 113:5–9.
9. Plaintiffs were supervised by branch managers. Plaintiffs’ interactions with their
supervisors concerning work-related matters varied, the frequency of which ranged
from daily to sparse. Otten Dep. 157:17–158:22; Pontilena Dep. 109:11–110:13;
Kuhn Dep. 75:22–76:13, 184:14–185:9; Rosenblatt Dep. 150:11–18.
10. With very few exceptions, Plaintiffs did not require pre-approval from their
supervisors to execute purchases and sales on behalf of their clients. Otten Dep.
152:25–153:4; Pontilena Dep. 110:14–111:3; Kuhn Dep. 114:14–115:5; Rosenblatt
11. Plaintiffs undertook various marketing activities designed to ascertain new clients,
including “cold” and “warm” calling prospect leads1 and hosting seminars and client
Plaintiff Pontilena described the difference between “cold calling” and “warm calling” in the following way: “Warm
calling is where you might know somebody, know who they are, but not ever approach them for business. So, you
call somebody that you know through someone or what have you, and you just, you know, try to get a business
appointment from that, as opposed to cold calling, where, you know, you’re totally cold, and you don’t know who
dinners. Otten Dep. 108:18–109:22, 120:22–24, 122:10–14; Pontilena Dep. 48:7–
49–22; Kuhn Dep. 56:13–23, 81:7–83:16; Rosenblatt Dep. 65:5–16, 82:19–83:5.
12. At all relevant times, Plaintiffs were paid a minimum of $1,972.00 in monthly
compensation. Plaintiffs did not receive incentive-based compensation until their
gross revenues exceeded their minimum monthly compensation. See Palmerini
Decl. at ¶ 8, Ex. A; Liskow Decl., Ex. 1 at MS-006426; Otten Dep. 186:9–187:5;
Pontilena Dep. 91:8–93:3; Kuhn Dep. 179:14–184:3; Rosenblatt Dep. 117:15–
Federal Rule of Civil Procedure 56 provides for 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); see Celotex Corp. v. Catrett, 477 U.S.
317, 322-23 (1986); Turner v. Schering-Plough Corp., 901 F.2d 335, 340 (3d Cir. 1990).
A factual dispute is genuine if a reasonable jury could find for the non-moving party, and
is material if it will affect the outcome of the trial under governing substantive law.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court considers all
evidence and inferences drawn therefrom in the light most favorable to the non-moving
party. Andreoli v. Gates, 482 F.3d 641, 647 (3d Cir. 2007).
Despite their attempts to create other disputes, the parties’ papers reveal that there
is truly only one issue before the Court: whether Plaintiffs’ primary duty as FAs consisted
of sales activity or whether that duty amounted to exempt activity as defined by regulatory
guidance. Before turning to that issue, however, the Court will first address Plaintiffs’
motion to strike because it seeks to constrain what the Court may consider at summary
A. Plaintiffs’ Motion to Strike
Plaintiffs moved to strike portions of MSSB’s Objections and Responses to
Plaintiffs’ Counterstatement of Facts (“MSSB’s Responses”) that violate Local Civil Rule
56.1. Specifically, Plaintiffs argue that Local Rule 56.1 only allows MSSB to respond to
Plaintiffs’ supplemental statement of facts and prohibits any contest to Plaintiffs’ responses
to MSSB’s statement of undisputed facts. Pls.’ Mot. to Strike at 2. Furthermore, Plaintiffs
argue that MSSB’s Responses are laced with impermissible legal argument, which the
Court should not consider. Id. at 2–3.
While the Court agrees that MSSB’s Responses contain some impermissible
content, Plaintiffs’ motion to strike is unnecessary. The Court is “empowered to disregard
those portions of a Rule 56.1 statement that violate the rule.” See Ill. Nat’l Ins. Co. v.
Wyndham Worldwide Operations, Inc. 85 F. Supp. 3d 785, 792 (D.N.J. 2015). The Court,
you’re talking to.” Pontilena Dep. 51:9–16.
therefore, “will sort out the permissibility of particular items [of both parties’ statements]
if and as necessary to [its] analysis.” See id. Accordingly, Plaintiffs’ motion to strike is
DENIED as moot.
B. The FLSA Administrative Exemption
The Exemption applies to any employee:
(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 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.
See 29 C.F.R. § 541.200(a) (2016).
Further explanation of the above criteria can be found elsewhere in the regulations.
Relevant to the instant case, the “primary duty” requirement means that “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.” See § 541.201(a). Additionally, a primary
duty may include “employees acting as advisers or consultants to their employer’s clients
or customers (as tax experts or financial consultants, for example) . . . .” See § 541.201(c).
The regulations identify factors to consider when determining an employee’s primary duty,
including, but not limited to: (1) the relative importance of the exempt duties as compared
to other types of duties; (2) the amount of time spent performing exempt work; and (3) the
employee’s relative freedom from direct supervision. See § 541.700(a). “[E]mployees
who spend more than 50 percent of their time performing exempt work will generally
satisfy the primary duty requirement,” but time alone “is not the sole test.” See §
The “discretion” requirement is further explained as involving “the comparison and
the evaluation of possible courses of conduct, and acting or making a decision after the
various possibilities have been considered.” See § 541.202(a). Moreover, “[t]he exercise
of discretion and independent judgment implies that the employee has the authority to make
an independent choice, free from immediate direction or supervision. However, employees
can exercise discretion and independent judgment even if their decisions or
recommendations are reviewed at a higher level.” See § 541.202(c).
The regulations contemplate specific examples of the types of employees who are
exempt, including such employees in the financial services industry:
Employees in the financial services industry generally meet the duties
requirements for the administrative exemption if their duties include work
such as collecting and analyzing information regarding the customer’s
income, assets, investments or debts; determining which financial
products best meet the customer’s needs and financial circumstances;
advising the customer regarding the advantages and disadvantages of
different financial products; and marketing, servicing or promoting the
employer’s financial products. However, an employee whose primary
duty is selling financial products does not qualify for the administrative
i. The Department of Labor Opinion Letter
In November 2006, the U.S. Department of Labor (“DOL”) published an opinion
letter (the “Letter”) that specifically addressed whether FAs meet the Exemption. Dep’t of
Labor, Wage & Hour Div., Op. Ltr. Fair Labor Standards Act (“Op. Ltr.”), No. FLSA200643, 2006 WL 3832994 (Nov. 27, 2006). 2 In this definitive piece of guidance, the DOL
considered the applicability of the Exemption to a job description identical to what
Plaintiffs described in their deposition testimonies. Compare id. at *1–2 (describing FAs’
primary duty as collecting clients’ financial information, analyzing it, comparing and
evaluating possible investment options and identifying investment strategies to meet
clients’ needs), with Otten Dep. 54:14–58:22 (describing Plaintiff’s adherence to the KYC
Rule), and Pontilena Dep. 35:10–40:1 (same), and Kuhn Dep. 69:5–73:15 (same), and
Rosenblatt Dep. 81:1–82:18 (same). The DOL concluded:
[FAs] have a primary duty other than sales, because their work includes
collecting and analyzing a clients’ financial information, advising the
client about the risks and the advantages and disadvantages of various
investment opportunities in light of the client’s individual financial
circumstances, and recommending to the client only those securities that
are suitable for the client’s particular financial status, objectives, risk
tolerance, tax exposure, and other investment needs. Based upon the
foregoing, we conclude that these [FAs] satisfy the duties requirement
under 29 C.F.R. § 541.203(b).
Op. Ltr., 2006 WL 3832994 at *5.
The DOL further concluded that FAs satisfied the discretion requirement because
their duties “include evaluating the client’s individual financial circumstances and
investment needs and assessing and comparing the alternatives before making
recommendations for investment options to the client . . . .” Id. at *6. Finally, the DOL
concluded that the FAs’ “salary/draw” compensation plan satisfied the salary requirement
The Letter refers to the employees in question as “registered representatives,” which includes varying job titles “such
as account executives, broker-representatives, financial executives, financial consultants, financial advisors,
investment professionals, and stockbrokers.” Id. at *1 (emphasis added). For convenience, the Court will refer to
“registered representatives” as “FAs” in quoted text.
because “the FA at all times is guaranteed and receives not less than a predetermined
amount that equals or exceeds the $455 minimum . . . .” See id. at *6–7.
ii. Judicial Applications of the Exemption
Two courts have considered the precise issue before this Court at summary
judgment: whether the Exemption applies to FAs. In Hein v. PNC Fin. Servs. Group, Inc.,
the Eastern District of Pennsylvania held that the Exemption applied. 511 F. Supp. 2d 563,
575 (E.D. Pa. 2007). The parties conceded that Plaintiff satisfied the salary and discretion
requirements. Thus, the only question before the court was whether Plaintiff’s primary
duty constituted sales or exempt activities. Id. at 571. Plaintiff spent approximately 50
percent of his time on the phone, conducting what Plaintiffs in this case have described as
“cold calling.” See id. at 568–69, 573. Plaintiff also performed tasks similar to those
described by Plaintiffs in this case, including: research of particular financial instruments;
learning clients’ assets, holdings and investment aims; recommending appropriate
investments based on an individual client’s needs; implementing actual transactions; and
generating new sales leads. See id. at 569.
The court held that plaintiff satisfied the primary duty requirement. First, plaintiff’s
most important task was to “make appropriate recommendations to clients, even if he did
not realize a sale as a result.” See id. at 572. Second, while plaintiff spent some time
processing actual transactions—i.e., non-exempt sales activity—the majority of his time
was spent performing exempt duties, such as collecting and analyzing client information
and recommending appropriate investments. See id. at 573–74. Importantly, “cold calling”
was exempt activity, at least in part, because such calls were used to “elicit information
about assets and investment goals,” which was considered administrative work under DOL
regulations. See id. at 573. Third, plaintiff exercised independence and discretion because
his supervisor did not directly review his recommendations to clients, attend client
meetings, and listen to client phone conversations, among other reasons.3 See id. at 574.
More recently, in Tsyn v. Wells Fargo Advisors, LLC, the Northern District of
California similarly held that the Exemption applied. See No. 14-cv-2552, 2016 WL
612926, at *11 (N.D. Cal. Feb. 16, 2016). As in Hein, plaintiffs’ activities in Tsyn mirrored
those presented by Plaintiffs here.4 See id. at *6. The court deferred to the DOL’s Letter
in finding that the pattern of plaintiffs’ work met the DOL’s description of the primary duty
requirement: “one where analysis, judgment, and advice predominate, and where attendant
sales are relatively ‘incidental.’” See id. at *9. Furthermore, the court rejected plaintiffs’
argument that their primary duty constituted sales activity because their work was
“ultimately motivated by the desire to sell financial products.” The court determined that
The court also considered a fourth factor, which was a comparison of plaintiff’s salary to that of a non-exempt
employee. See id. at 574–75.
“They collected and analyzed clients’ financial information, assessed their particular needs, developed investment
plans, advised clients about the benefits and drawbacks of different investments, and made suitable investment
recommendations. They also marketed and promoted their services.” Id.
this “reductive characterization is at all levels inconsistent with longstanding regulation”
and “with express regulatory guidance.” See id. at *11 (emphasis original).
Plaintiffs in this case rely on Martin v. Cooper Elec. Supply Co., 940 F.2d 896 (3d
Cir. 1991), and DOL Administrative Interpretation (“Interpretation”) No. 2010-1, in
support of their argument that their primary duty was non-exempt sales activity. See Pls.’
Opp’n at 7–14. Plaintiffs ignore, however, that the Court has already rejected their reliance
on these authorities at the class and collective action certification phase. See ECF No. 146
at 11, n.3. Notably, Cooper addressed individuals who sold electrical products and the
DOL Interpretation addressed mortgage loan officers. Neither authority is on point here.
See id. Instead, the Court will rely on the regulatory authority and case law that expressly
address FAs. The Court finds that the DOL’s regulations provide the agency’s body of
experience and informed judgment about the FLSA, which commands considerable
deference. See Hein, 511 F. Supp. 2d at 570 (citation omitted). With this understanding,
the Court will now apply the undisputed facts to the Exemption’s three requirements.
iii. Salary Requirement
Plaintiffs do not deny that they received a minimum of $1,972.00 per month in
compensation at all relevant times. See Pls.’ Counterstatement at ¶¶ 16–17. Rather, they
argue that they were paid a “draw” on their commissions, which violated the Exemption’s
salary requirement. See Pls.’ Opp’n at 4–6. In their own words, Plaintiffs acknowledged
that they received commission payments only after their gross revenues exceeded their
monthly “draws.” See Otten Dep. 187:2–5; Pontilena Dep. 91:8–93:3; Kuhn Dep. 179:14–
184:3; Rosenblatt Dep. 118:5–120:8. Plaintiffs testified that if they did not produce enough
gross revenues to cover their monthly “draws,” then their commissions would be reduced
in subsequent months to cover the deficiency. See Otten Dep. 186:11–22; Pontilena Dep.
90:5–9; Kuhn Dep. 182:4–17; Rosenblatt 117:3–9. Regardless of these commission
reductions, however, Plaintiffs still received their “draws” every month. See Otten Dep.
188:25–189:4; Pontilena Dep. 92:3–22; Rosenblatt Dep. 119:20–120:2 (“There was always
an automatic deposit every two weeks.”).
The DOL’s Letter makes clear that this compensation model meets the salary
requirement. See Op. Ltr., 2006 WL 3832994, at *3, 6–7 (describing a “reconciliation
process” between the salary/draw and fee/commission components of compensation and
concluding that it meets the salary requirement). Plaintiffs’ characterization of their
compensation as a “draw” is irrelevant. Plaintiffs received a predetermined amount of at
least $1,972.00 per month at all relevant times, which clearly satisfies the requirement. See
Palmerini Decl. at ¶¶ 4, 8, Ex. A. It is, therefore, undisputed that Plaintiffs’ compensation
satisfied the salary requirement.
iv. Primary Duty
Plaintiffs admit that they performed all of the tasks described in the regulations and
the DOL’s Letter as exempt duties under the primary duty requirement. See Part I, supra,
at 2–3 (Fact No. 3). Plaintiffs argue, however, that their performance of these tasks was
“incidental to sales” and that their primary duty as FAs was, therefore, the non-exempt sale
of financial products. See Pls.’ Opp’n at 23–24.
Plaintiffs’ argument mirrors that of the plaintiffs in Tsyn, which that court rejected
as a “reductive characterization” that defies the regulations. See 2016 WL 612926, at *11.
Plaintiffs attempt to convince this Court that Tsyn is inapplicable here because: (1) the facts
in Tsyn were undisputed whereas Plaintiffs dispute the facts in the instant case; (2)
Plaintiffs contend that their performance of exempt tasks was “part and parcel” of selling
financial products whereas plaintiffs in Tsyn merely argued that their performance was
“secondary” to selling; and (3) the Tsyn court erroneously rejected the DOL’s
Interpretation because it concerned mortgage loan officers even though it was intended to
apply broadly to all employees subject to the Exemption. See Pls.’ Opp’n at 30–31.
The Court is not persuaded. First, the facts here, as in Tsyn, are undisputed. As
noted, Plaintiffs’ own deposition testimonies unequivocally establish that they performed
tasks identical to those described in the DOL’s Letter and in the Tsyn opinion. Second,
Plaintiffs’ characterization that their performance of these tasks was “part and parcel” to
selling financial products is irrelevant. The only relevant inquiry is whether their
performance “directly related to the management or general business operations of the
employer or the employer’s customers.” See 29 C.F.R. § 541.200(a)(2). Third, the Court
has already concluded that the Interpretation upon which Plaintiffs rely is uninformative of
whether Plaintiffs’ primary duty satisfies the Exemption. See ECF No. 146 at 11.
Furthermore, even assuming that the DOL intended for it to apply broadly, that does not
mean that the Interpretation was intended to apply to the financial services industry, where
the DOL had already published an opinion expressly applying the Exemption to Plaintiffs’
exact job description.
The Court is more persuaded by the DOL’s Letter and the Tsyn and Hein opinions
in applying the instant facts to the Exemption. In so doing, the Court concludes that
Plaintiffs’ primary duty clearly satisfied the Exemption. While the time spent performing
the exempt tasks may have varied among the Plaintiffs, they all admit that they spent no
more than one hour per day performing the non-exempt task of processing transactions for
their clients’ portfolios. See Otten Dep. 159:13–160:14; Pontilena Dep. 75:6–76:14; Kuhn
Dep. 86:16–87:11; Rosenblatt Dep. 113:5–9; see also Hein, 511 F. Supp. 2d at 573–74
(describing the processing of transactions as non-exempt). It is, therefore, undisputed that
Plaintiffs spent the vast majority of their time performing exempt tasks, including
collecting and analyzing a client’s financial information, advising the client about
investment opportunities, and recommending financial products that are suitable to the
client’s particular financial status. See Op. Ltr., 2016 WL 3832994, at *5. Furthermore,
whatever amount of time Plaintiffs spent “cold” and “warm” calling, the Court finds that
activity to constitute exempt “business development activities.” See id.; Hein, 511 F. Supp.
2d at 573. Plaintiffs’ primary duty satisfied the Exemption.
v. Discretion and Independent Judgment
The undisputed facts also clearly establish that Plaintiffs exercised discretion and
independent judgment. Plaintiffs’ attempts to create factual disputes to the contrary are
unavailing. See Pls.’ Opp’n at 36–39. Plaintiffs testified that they had varying degrees of
interaction with their supervisors, ranging from daily to sporadic interaction. See Part I,
supra, at 3 (Fact No. 9). Regardless of the frequency, however, Plaintiffs admitted that
they did not need preapproval from their supervisors to execute transactions on behalf of
their clients, except in limited circumstances and on rare occasions. See id. (Fact No. 10).
In making investment recommendations, Plaintiffs used their discretion and judgment in
choosing from a “huge array” of MSSB financial products. See id. (Fact No. 5, Kuhn Dep.
75:6–7). Finally, Plaintiffs’ supervisors did not directly oversee Plaintiffs’ client
communications or recommendations. Otten Dep. 153:6–21, Pontilena Dep. 111:25–
112:3; Kuhn Dep. 75:19–21; Rosenblatt Dep. 150:11–18.
The DOL characterized the discretion requirement as involving “comparing and
evaluating possible courses of conduct and acting or making a decision after the various
possibilities have been considered.” Op. Ltr., 2016 WL 3832994, at *6. “The decisions
made as a result of discretion and independent judgment may consist of recommendations
for action rather than the actual taking of action.” Id. This is precisely what Plaintiffs did.
It is an indisputable fact that Plaintiffs “evaluat[ed] the client’s individual financial
circumstances and investment needs and assess[ed] and compar[ed] the alternatives before
making recommendations for investment options to the client,” which satisfied the
In sum, MSSB has met its burden in showing that there is no factual dispute that
Plaintiffs satisfied the Exemption, and MSSB was not required to pay them overtime
wages. Accordingly, MSSB’s motion for summary judgment is GRANTED and Count I
is DISMISSED WITH PREJUDICE.
vi. State Law Exemptions Are Not Materially Different from the FLSA
Plaintiffs previously conceded that the exemption rules under the state statutes at
issue do not materially differ from the FLSA. See Pls.’ Mem. of Law in Supp. of Mot. for
Class Certification 13 n.4, ECF No. 124-1 (“The FLSA’s administrative exemption does
not materially differ from those of the state wage and hour laws of New York, New Jersey
and Connecticut.”). Plaintiffs now try to distinguish the New Jersey law from the FLSA
by arguing that the New Jersey law did not adopt the FLSA’s version of the Exemption
until September 6, 2011. Since Plaintiffs Otten and Pontilena filed their complaints before
this date, they contend that the previous, more narrow version of the Exemption should
apply. See Pls.’ Opp’n at 41–43.
As MSSB correctly points out, however, the previous New Jersey law was modeled
after federal regulations drafted prior to 2004. See Defs.’ Reply at 21. The DOL
acknowledged in the Letter that the criteria of the Exemption were “substantially the same”
in the 2004 revised regulations as they were under the prior rule. See Op. Ltr., 2016 WL
3832994, at *7. Thus, the outcome under either version of the Exemption “would be
essentially identical.” See id. Furthermore, in its commentary addressing the 2011 revision
to the New Jersey exemption, the New Jersey Department of Labor and Workforce
Development clarified that any discrepancy between the New Jersey law and the FLSA
after 2004 was an “oversight.” See 43 N.J.R. 2352(a). The Court, therefore, rejects
Plaintiffs’ argument and finds that there is no material difference between the New Jersey
and FLSA exemptions.
The Court finds that Plaintiffs were exempt employees under New York, New
Jersey and Connecticut law for the same reasons as they were under the FLSA.
Accordingly, MSSB’s motion for summary judgment is GRANTED and all remaining
counts are DISMISSED WITH PREJUDICE.5
For the reasons stated above, MSSB’s motion for summary judgment is GRANTED
and all remaining claims are DISMISSED WITH PREJUDICE. Plaintiffs’ motion to
strike is DENIED as moot. An appropriate order follows.
/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Date: February 28, 2017
The Court does not need to reach MSSB’s remaining arguments because it finds that Plaintiffs are exempt under
the FLSA and state law.
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