Flood v. Just Energy Mktg. Corp.
904 F.3d 219
2d Cir.2018Background
- Kevin Flood and >100 similarly situated door-to-door solicitors worked for Just Energy selling residential energy plans; Flood worked 75–80% of his time soliciting door-to-door and was paid solely by commission.
- Flood obtained signed customer service agreements and procured third-party verification calls; agreements could later be rejected for credit or utility "slam block" reasons.
- Flood attended daily morning meetings, followed company scripts/dress code, was transported to neighborhoods by company vans, and submitted signed agreements to the regional office.
- Flood sued under the FLSA and NYLL claiming failure to pay minimum wage and overtime; Just Energy invoked the FLSA/NYLL "outside salesman" exemption.
- The district court granted summary judgment for Just Energy, finding Flood an exempt outside salesman; the Second Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Flood was "making sales" for the outside-salesman exemption | Flood: Not a sale because employer retained discretion to reject contracts and final consummation could occur later | Just Energy: Flood obtained customer commitments and was credited/paid on commissions; that suffices as "making sales" | Held: Flood was "making sales"; obtaining a customer commitment suffices, employer's post‑hoc rejection does not negate the sale determination |
| Whether "external indicia" (training, supervision, schedule) defeat sales classification | Flood: Extensive supervision, mandatory meetings, script and transport show he was not an independent outside salesman | Just Energy: Such indicia do not negate the core activity of obtaining commitments; supervision alone is immaterial to the "making sales" definition | Held: External indicia are secondary; supervision alone does not create a triable issue when primary duty is making sales |
| Whether Flood was "obtaining orders or contracts for services" (alternative ground) | Flood: Similar to above—employer control and post‑signing discretion undermine characterization | Just Energy: Flood secured signed orders/contracts for services and was paid on them; regulation covers obtaining service contracts even if performance is by others | Held: Held a fortiori that Flood obtained orders/contracts for services and thus is exempt |
| Whether collateral estoppel precluded Just Energy from invoking the exemption (based on adverse Ohio decision) | Flood: Hurt v. Commerce Energy (N.D. Ohio) precludes re-litigating exemption | Just Energy: Prior Ohio decision is not final, appellate review lacking, and other courts have reached contrary results | Held: Collateral estoppel denied as unfair and inapplicable (Hurt addressed only one prong and was not final) |
Key Cases Cited
- Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (2012) (outside-sales exemption can extend to employees who obtain commitments rather than consummate sales)
- Encino Motorcars, LLC v. Navarro, 138 S. Ct. 1134 (2018) (exemptions to FLSA receive a fair reading, not a narrowly hostile construction)
- Novartis Wage & Hour Litig., 611 F.3d 141 (2d Cir. 2010) (prior Second Circuit discussion of pharmaceutical reps; discussed and abrogated in part by Christopher)
- Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979) (standards and fairness considerations for offensive collateral estoppel)
- Clements v. Serco, Inc., 530 F.3d 1224 (10th Cir. 2008) (distinguishing recruiters who could not obtain commitments from outside-salesman exemption)
- Gregory v. First Title of Am., Inc., 555 F.3d 1300 (11th Cir. 2009) (employee who obtained orders for services and was credited with them qualified as an outside salesman)