Thomas Killion v. KeHE Distributors
761 F.3d 574
6th Cir.2014Background
- KeHE discharged 69 sales representatives in 2012 during a restructuring in the Great Lakes region; plaintiffs allege FLSA overtime violations for nonpayment of overtime hours.
- Plaintiffs seek collective action under 29 U.S.C. §216(b); district court allowed waivers to exclude those who signed separation agreements or modified them.
- KeHE argued waivers were valid and that plaintiffs were outside sales employees exempt from overtime under 29 U.S.C. §213(a)(1).
- District court certified a conditional collective action for non-waived employees, denied voiding waivers, and later granted summary judgment favoring KeHE as to exemption; plaintiffs appealed.
- This court dismissed the interlocutory appeal (Case No. 13-3357) for lack of jurisdiction, but on the merits affirmed in part and reversed in part Case No. 13-4340, finding factual disputes about exemption and waivers.
- On remand, district court should consider nine-factor framework under 29 C.F.R. § 541.504(b) and determine if plaintiffs’ activities constitute sales and, if so, whether sales are their primary duty.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs are exempt as outside sales employees | Killion/Hoaly argue they make sales via reorders and promotions | KeHE contends they primarily perform inventory/stocking tasks, not sales | Not resolvable as matter of law; jury should decide if sales and primary duty exist |
| Whether promotional activity was incidental to plaintiffs’ own sales | Promotional duties support own sales; evidence shows alignment with account managers | Promotional work mainly furthers account managers’ sales, not plaintiffs’ own sales | Juror questions remain; remand for applying §541.503(a) factors |
| Validity of collective-action waivers in severance agreements | Waivers cannot bar FLSA rights; Boaz framework applies | Waivers valid as contracts governing litigation forum | Waivers invalid to bar FLSA rights where no arbitration clause; affirmed in part, reversed in part |
| Exclusion of plaintiffs’ expert report | Expert offered relevant analyses on time allocation | Report contained legal conclusions and improper legal terms | District court did not abuse discretion; exclusion affirmed |
Key Cases Cited
- Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156 (U.S. 2012) (outside-sales exemption—contextual framework for sales concept; limited applicability)
- Hodgson v. Klages Coal & Ice Co., 435 F.2d 377 (6th Cir. 1970) (routemen not outside sales; primary duty not exempt without sales focus)
- Ackerman v. Coca-Cola Enterprises, Inc., 179 F.3d 1260 (10th Cir. 1999) (factor-based analysis; regulatory scheme context (driver-sales) considered persuasive)
- Boaz v. FedEx Customer Information Services, Inc., 725 F.3d 603 (6th Cir. 2013) (collective-action waivers not allowed to bar statutory rights absent arbitration clause)
- Meza v. Intelligent Mexican Mktg., Inc., 720 F.3d 577 (5th Cir. 2013) (persuasive consideration of §541.504 factors in outside-sales analysis)
- Italian Colors Restaurant v. Bank of America Corp., 133 S. Ct. 2304 (U.S. 2013) (arbitration/waivers considerations in class actions (FAA context))