Avraham GOLD, Individually, on behalf of all others similarly situated, Plaintiff-Appellant, v. NEW YORK LIFE INSURANCE COMPANY; New York Life Insurance and Annuity Corporation; New York Life Insurance Company of Arizona; John Does 1 through 50, said names being fictitious individuals; ABC Corporations 1 through 50, said names being fictitious companies, partnerships, joint ventures and/or corporations; and New York Life Securities, LLC f/k/a New York Life Securities, Inc., Defendants-Appellees.
Docket No. 12-2344-cv.
United States Court of Appeals, Second Circuit.
Sept. 18, 2013
730 F.3d 137
Argued: April 3, 2013.
CONCLUSION
For the foregoing reasons the judgment of the district court is AFFIRMED.
John Halebian, Lovell Stewart Halebian Jacobson LLP, New York, NY (Adam C. Mayes, on the briefs), for Plaintiffs-Appellants.
Richard G. Rosenblatt, Morgan Lewis & Bockius LLP, Princeton, NJ (Sean P. Lynch, Morgan Lewis & Bockius LLP, Princeton, NJ; Michael L. Banks, Morgan Lewis & Bockius LLP, Philadelphia, PA, on the brief), for Defendants-Appellees.
Richard G. Rosenblatt, Morgan Lewis & Bockius LLP, Princeton, NJ (Sean P. Lynch, Morgan Lewis & Bockius LLP, Princeton, NJ; Michael L. Banks, Morgan Lewis & Bockius LLP, Philadelphia, PA, on the brief), for Defendants-Appellees.
Before: B.D. PARKER, LOHIER, and CARNEY, Circuit Judges.
BARRINGTON D. PARKER, Circuit Judge:
Plaintiff-Appellant Avraham Gold appeals from a judgment of the United States District Court for the Southern District of New York (Pauley, J.) dismissing his complaint based on the so-called “home state exception” to federal jurisdiction under the Class Action Fairness Act (“CAFA“),
In 2009, Gold sued his former employer, New York Life Insurance Company (“New York Life“), both individually and on behalf of a putative class of insurance agents, alleging state law claims seeking unpaid overtime wages and recovery of improper wage deductions. See
Gold appeals, contending that New York Life waived the home state exception by failing to raise it within a reasonable time. For the reasons that follow, we hold that CAFA‘s home state exception is not jurisdictional and must be—and in this case was—raised within a reasonable time. We also hold that the 2011 amendment to New York Labor Law is not retroactive and that the district court‘s grant of partial summary judgment with respect to Gold‘s overtime claim was correct.
BACKGROUND
New York Life is a mutual insurance company that sells life insurance and other
When Gold started with New York Life, he was licensed to sell life insurance as well as annuities. Later, he obtained licenses which allowed him to also sell products with investment components and permitted him to use the title “registered representative.” Joint Appx. 868-69. To make sales, Gold was trained by New York Life to follow a six-step process that included researching a client‘s needs, recommending products to meet those needs, and ultimately selling the client those products. Joint Appx. 169-70. As a registered representative, Gold was obligated to also comply with Financial Industry Regulatory Authority (“FINRA“) regulations ensuring that he only recommended products that were suitable for his clients. See FINRA Manual, Rule 2111 (Suitability Rule).
While at New York Life, Gold‘s wage consisted solely of commissions on sales. He was not paid a salary or an hourly wage. New York Life used a so-called “ledger-based” payment system under which an agent, including registered representative, would receive credits for commissions he earned and debits for expenses he incurred such as for use of New York Life‘s telephone services and office space. Joint Appx. 307, 311-12, 591. At the end of each bi-weekly pay period, New York Life would issue the agent a paycheck that netted the credits on his ledger against the debits. Joint Appx. 14, ¶¶ 12-24. In 2009, Gold sued New York Life in a putative class action, predicating jurisdiction on CAFA, and asserting that because he was responsible for making investment recommendations to clients, he should not have been classified as an outside salesman and denied overtime pay. See
In May 2011, the district court granted New York Life summary judgment on Gold‘s overtime claim, holding that there was no genuine dispute of material fact as to whether Gold‘s primary duty was sales and therefore whether he was properly classified as an outside salesman and excluded from overtime pay. Gold v. New York Life Ins. Co., No. 09-Civ-3210, 2011 WL 2421281, at *6 (S.D.N.Y. May 19, 2011). In August 2011, proceeding on the wage deduction claim alone, Gold moved to add a claim for liquidated damages under New York Labor Law.1 See
After the summary judgment rulings, and nearly three years after the complaint had been filed, New York Life asserted that it had discovered that more than two-thirds of the putative class members were New York citizens. Arguing that the requirements of CAFA‘s home state exception had been met, it then moved to dismiss the complaint for lack of subject matter jurisdiction, or in the alternative, for the court to decline jurisdiction. In response, Gold claimed that New York Life‘s delay in raising the issue constituted waiver. New York Life contended that the exception was jurisdictional and could not be waived. In the alternative, New York Life argued that its delay was justified by the discovery schedule, requested by Gold and imposed by the court, that required the parties to complete all individual discovery before commencing class discovery. New York Life reasoned that because it was forced to wait until all individual discovery was complete—in 2011—to start class discovery, it could not have determined any earlier that more than two-thirds of the class consisted of New York citizens.
The district court concluded that the exception was not jurisdictional and that New York Life had not waived the issue because its delay was justified by the discovery schedule. Gold v. New York Life Ins. Co., No. 09-Civ-3210, 2012 WL 1674300, at *3-4 (S.D.N.Y. May 14, 2012). Because it was not disputed that the home state exception applied if the issue had not been waived, the district court declined to exercise jurisdiction and dismissed the complaint. Id. at *1, 4. This appeal followed.
DISCUSSION
I. CAFA‘s Home State Exception
CAFA confers original federal jurisdiction over class actions involving (1) an aggregate amount in controversy of at least $5,000,000; and (2) minimal diversity, i.e., where at least one plaintiff and one defendant are citizens of different states.
The district court, relying on Graphic Communications v. CVS Caremark Corporation, 636 F.3d 971, 973 (8th Cir.2011), and Morrison v. YTB International, Inc., 649 F.3d 533, 536 (7th Cir. 2011), held that the home state exception was not jurisdictional because the “‘decline to exercise’ language ‘inherently recognizes [that] the district court has subject matter jurisdiction‘” but must actively decline to exercise it if the exception‘s requirements are met. Gold, 2012 WL 1674300, at *2 (quoting Graphic Commc‘ns, 636 F.3d at 973). Reviewing this issue de novo, we agree with the district court‘s conclusion, and align our Circuit with the Seventh and Eighth Circuits, in concluding that Congress‘s use of the term “decline to exercise” means that the exception is not jurisdictional.
Gold argues that if the exception is not jurisdictional, it must be raised within a reasonable time, and that New York Life failed to do so and thereby waived the exception. We agree with Gold and hold that parties invoking the exception must do so within a reasonable time. However, we further hold that New York Life did so and therefore did not waive the exception.
In Graphic Communications, the defendants removed a case alleging various drug pricing claims from state to federal court, invoking federal jurisdiction under CAFA. The plaintiffs, relying on another of CAFA‘s exceptions—the local controversy exception, which also includes the “decline to exercise jurisdiction” language—moved to remand the case to state court. The district court agreed that the exception applied and remanded the case. The defendants appealed, contending that the motion to remand had not been timely. CAFA contains no time limit for when remand motions must be made. The Eighth Circuit held that remand motions based on CAFA must be raised within a reasonable time. See Graphic Commc‘ns, 636 F.3d at 973-74. We believe that this approach is sound and similarly hold that motions to dismiss under CAFA‘s home state exception must also be made within a reasonable time. Cf. Hamilton v. Atlas Turner, Inc., 197 F.3d 58, 62 (2d Cir.1999) (affirming that defendant waived its objection to personal jurisdiction by failing to timely raise it through a motion to dismiss, although the federal rules provide no time limit for such motions). While what is reasonable will vary according to the relevant facts, it is preferable that such motions be made at the earliest practicable time. See Snapper, Inc. v. Redan, 171 F.3d 1249, 1257 n. 18 (11th Cir.1999) (noting that if a remand is based on an issue that “is generally apparent from the time of removal,” the “reasonable time may be significantly shorter“).
Here, nearly three years after the complaint was filed, New York Life moved to dismiss based on the home state exception. Under most circumstances we would have serious doubts that a delay of this length could be deemed reasonable. But, the application of the exception was, to a certain extent, complicated by the discovery schedule imposed by the district court. Gold had requested that individual discovery proceed first, followed by class discovery. The court agreed, and as a result, class discovery did not start until 2011. New York Life claimed that it learned only through class discovery that more than two-thirds of the class—New York Life agents employed in New York—were New York citizens, and then moved to dismiss based on the home state exception. Gold contended that New York Life‘s delay was excessive and that consequently, the exception had been waived. The district court disagreed. It held that because of the agreed upon bifurcated discovery plan, New York Life had not had the opportunity to discover the citizenship of class members until it undertook class discovery in 2011 and that, under these circumstances, New York Life‘s delay was excused. Gold, 2012 WL 1674300, at *4.
We note at the outset that we are skeptical of the contention that nearly three years is a reasonable time for an employer to determine where its sales force lives, particularly where, as here, the sales force in question is limited to those who worked in the very “home state” at issue. Howev
II. Retroactivity of 2011 Amendment to New York Labor Law
Prior to November 2009, New York Labor Law‘s liquidated damages provision provided that if a plaintiff proved that an employer‘s failure to pay a required wage was “willful,” the plaintiff could recover “an additional amount as liquidated damages equal to twenty-five percent of the total wages found to be due him.”
Generally, “retroactive operation of statutes is not favored by [New York] courts” and it “takes a clear expression of the legislative purpose to justify a retroactive application.” See Majewski v. Broadalbin-Perth Cent. School Dist., 91 N.Y.2d 577, 584, 673 N.Y.S.2d 966, 696 N.E.2d 978 (1998). Under New York law, to determine if such a purpose exists, courts look to the text of the legislation at issue. See id. at 583-84, 673 N.Y.S.2d 966, 696 N.E.2d 978. If the text is not clear, courts then look to the legislative history. See id. Based on our review, we see no clear expression of retroactivity. Indeed, neither the text nor the legislative history mentions retroactivity. See S.B. 8380, 233rd Legis., Reg. Sess. (N.Y.2010) (pro
Faced with no support for retroactivity in the text or legislative history, Gold contends that, because the statute is remedial, under New York law, any amendments to it are presumed to have retroactive effect. That contention, however, does not reflect the current state of New York law. The New York Court of Appeals has noted that, although amendments to remedial statutes were once presumed to be retroactive, the classification of a statute as “remedial” no longer automatically overcomes the strong presumption against retroactivity and that a better guide for discerning the intent of the legislature is text and history. Majewski, 91 N.Y.2d at 584, 673 N.Y.S.2d 966, 696 N.E.2d 978; see also CFCU Cmty. Credit Union v. Hayward, 552 F.3d 253, 262 (2d Cir.2009). Because there is no support for retroactivity in either the text or the legislative history, we hold that the 2011 amendment is not retroactive.3
III. Summary Judgment
The district court held that there was no genuine dispute as to a material fact that Gold‘s primary responsibility was to sell insurance and that, consequently, he was properly classified as an outside salesman not entitled to overtime pay. Ordinarily, “[a] grant of partial summary judgment that resolves only some of the issues raised by a complaint is not an appealable final judgment.” West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 781 (2d Cir. 1999). However, “[u]pon appeal from a final judgment concluding the action, earlier summary dispositions merge in the judgment and are reviewable.” Id. (alteration in original, citations and internal quotations omitted). Our review is particularly warranted given the preclusive effects of such a ruling over future claims. See, e.g., Gentile v. MCA Records, Inc., 17 A.D.3d 264, 793 N.Y.S.2d 407 (N.Y.App.Div.1st Dep‘t 2005). Consequently, we review the district court‘s summary judgment ruling granting summary judgment as to Gold‘s overtime claim de novo4 and agree with its conclusion. See In re Novartis Wage & Hour Litig., 611 F.3d 141, 150 (2d Cir. 2010) (abrogated on other grounds by Christopher v. SmithKline Beecham Corp., — U.S. —, 132 S.Ct. 2156, 183 L.Ed.2d 153 (2012)).
(1)Whose primary duty is: (i) making sales ...; or (ii) obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and (2) Who is customarily and regularly engaged away from the employer‘s place or places of business in performing such primary duty.
Our review of the record before the district court confirms that Gold‘s primary duty was selling insurance. He was hired and trained by New York Life to sell insurance. Joint Appx. 879, 129, 902-09, ¶¶ 59-72. His compensation as well as his continued affiliation with the company was tied exclusively to his sales. Joint Appx. 866-67, ¶¶ 7-8, 914-15, ¶¶ 80-83. He was responsible for maintaining his own client lists, and he conceded that he was regularly engaged away from his employer‘s place of business as his responsibilities were to “go out, meet people” and “close deals.” Joint Appx. 901-02, ¶¶ 57-58.
Although Gold argues that research and making investment recommendations were his primary duties, even in the light most favorable to Gold, these duties were merely components of New York Life‘s six-step process for selling insurance. See Joint Appx. 169-70 (describing that in order to ultimately sell insurance products, agents should research clients’ financial situations and based on that research, recommend products to them). Gold also argues that because he was a registered representative and thereby subject to FINRA‘s requirements that he provide sound investment advice, he was a financial advisor, not a salesperson. Gold is correct that FINRA required him to only recommend suitable products to his clients, but this does not change the fact that he was paid only for selling insurance, not for offering financial advice. Moreover, even after becoming a registered representative, ninety percent of Gold‘s sales were of traditional life insurance products which did not require the title of “registered representative” and did not require that he comply with FINRA regulations. Joint Appx. 875-77, ¶¶ 22-24.
Testimony from Gold‘s expert David Denmark fails to generate a factual dispute over his duties. Denmark offers observations about registered representatives generally, but he did not interview Gold or review his deposition testimony. Denmark Expert Rep., Joint Appx. 316-37. But FLSA regulations are explicit that the determination of an employee‘s exemption status must be based on the specific employee‘s actual primary duties, not on his or her title or position. See Myers v. Hertz Corp., 624 F.3d 537, 549-50 (2d Cir. 2010).
The Department of Labor (“DOL“) advisory letters put forth by Gold also do not raise a genuine factual dispute. One letter concerns individuals who—unlike Gold—have Series 7 licenses and are compensated for investment advice. DOL Letter 11/27/06, Joint Appx. 364-71; Joint Appx. 865. In the other letter, the DOL addresses insurance agents and describes two types: (1) outside salesmen-agents whose primary duty is sales; and (2) ad
CONCLUSION
For the foregoing reasons, the judgment of the district court is affirmed.
Salah ANANI, Plaintiff-Appellant, v. CVS RX SERVICES, INC., Defendant-Appellee.
No. 11-2359-CV.
United States Court of Appeals, Second Circuit.
Argued: June 27, 2012. Decided: Sept. 20, 2013.
Seth R. Lesser (Fran Rudich, on the brief), Klafter, Olsen & Lesser LLP, Rye Brook, NY, for Plaintiff-Appellant.
James J. Swartz, Jr. (Felice B. Ekelman, Jackson Lewis LLP, New York, NY, on the brief), Ashe Rafuse & Hill LLP, Atlanta, GA, for Defendant-Appellee.
Before: WINTER, STRAUB, and CHIN, Circuit Judges.
WINTER, Circuit Judge:
Salah Anani appeals from Judge Spatt‘s grant of summary judgment dismissing Anani‘s complaint against CVS RX Services, Inc. (“CVS“). The district court held that appellant was exempt from the Federal Fair Labor Standards Act‘s (“FLSA“) time-and-a-half overtime requirement because of an exemption for highly-paid employees. We affirm.