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May 26, 1999


The opinion of the court was delivered by: Hamilton, United States Magistrate Judge.


Now before the court is the motion of defendant East Bay Municipal Utility District ("EBMUD" or "the District") for summary judgment. Having read the parties' papers, reviewed the evidence submitted, and carefully considered the parties' arguments and the relevant legal authority, and good cause appearing, the court hereby rules as follows.


EBMUD, which is a publicly-owned utility, supplies water and provides wastewater treatment for parts of Alameda and Contra Costa Counties. EBMUD serves 20 incorporated cities and 15 unincorporated communities, and employs approximately 1900 employees, divided among 10 departments. Most of the water used by EBMUD comes from the watershed of the Mokelumne River, which collects water from the melting snows of Alpine, Amador, and Calaveras Counties. Other sources of water are the runoff from the local watershed, plus limited access to water from the American River (to offset deficiencies in drought years).

Plaintiffs, who are employees of EBMUD, filed this proposed class action for overtime compensation and liquidated damages pursuant to section 16(b) of the Fair Labor Standards Act of 1938, as amended ("FLSA"), 29 U.S.C. § 201, et seq. The FLSA requires employers to pay employees overtime compensation for all hours worked over forty per week, unless the employees are "employed in a bona fide executive, administrative, or professional capacity." See 29 U.S.C. § 207, 213. Approximately 85 per cent of EBMUD employees are designated hourly and are entitled to overtime compensation, and approximately 15 per cent are designated exempt. This case was filed by a number of plaintiffs who had been designated exempt, each of whom asserted that he or she was nonexempt and therefore entitled to overtime compensation.

Six plaintiffs remain in the case — Ida A. McClendon, Gayle B. Montgomery, Thomas F. Fox, Clark G. Sharick, William D. Kerr, and Bruce A. Lepore. EBMUD now seeks summary judgment that the remaining six plaintiffs fall within the executive and/or administrative exemption.


A. Legal Standard

1. Summary Judgment

Summary judgment is appropriate when there is no genuine issue as to material facts and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56. Material facts are those that might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute as to a material fact is "genuine" if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See id. In ruling on a motion for summary judgment, the court may not weigh the evidence, and is required to view the evidence in the light most favorable to the nonmoving party. See id.

A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion, and of identifying those portions of the pleadings and discovery responses that demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the moving party will have the burden of proof at trial, it must affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party. On an issue where the nonmoving party will bear the burden of proof at trial, the moving party can prevail merely by pointing out to the district court that there is an absence of evidence to support the nonmoving party's case. See id. If the moving party meets its initial burden, the opposing party must then set forth specific facts showing that there is some genuine issue for trial in order to defeat the motion. See Anderson, 477 U.S. at 250, 106 S.Ct. 2505.

2. FLSA Exemptions

The FLSA requires employers to pay overtime compensation to all employees who do not fall within the three exemptions. See 29 U.S.C. § 213 (exempt employees include those "employed in a bona fide executive, administrative, or professional capacity," as defined by the Department of Labor). The employer bears the burden of establishing that an employee falls within an exemption, see Corning Glass Works v. Brennan, 417 U.S. 188 196-97, 94 S.Ct. 2223, 41 L.Ed.2d 1 (1974); Reich v. John Alden Life Ins. Co., 126 F.3d 1, 7 (1st Cir. 1997); and the exemptions must be "narrowly construed against the employers seeking to assert them." See Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 4 L.Ed.2d 393 (1960).

The FLSA does not articulate the parameters of the three exemptions; the application of the exemptions is set forth in the regulations and interpretations promulgated by the Secretary of Labor, pursuant to 29 U.S.C. § 213. The Secretary's regulations have the force of law, see United States v. Nixon, 418 U.S. 683, 695, 94 S.Ct. 3090, 41 L.Ed.2d 1039 (1974), and are to be given controlling weight unless found to be arbitrary, capricious, or contrary to the statute. See Chevron U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843-44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The interpretive regulations, on the other hand, are not conclusive, as they merely set forth the Secretary's position regarding the application of the regulations in specific contexts. See Reich v. John Alden, 126 F.3d at 8. "Even so, these interpretations have the `power to persuade, if lacking power to control,' as they `constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.'" Id. (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944)).

The interpretative regulations emphasize that "job titles [are] insufficient as yardsticks" in determining the importance of an employee to the employer, or the employee's exempt or nonexempt status under the regulations. "Titles can be had cheaply and are of no determinative value." 29 C.F.R. § 541.201 (b). The status of any particular employee must be determined on the basis of whether his or her duties, responsibilities, and salary meet all the requirements of the appropriate section of the regulations. See 29 C.F.R. § 541.201 (b)(2).

B. Defendant's Motion for Summary Judgment

Department of Labor regulations establish two tests for classification as exempt white collar employees: the "duties" test and the "salary" test. See 29 C.F.R. § 541.1-541.3. Generally, employees must satisfy both tests before they can be classified as exempt. See Barner v. City of Novato, 17 F.3d 1256, 1259-60 (9th Cir. 1994). The issue remaining for decision in this case is whether the six above-named plaintiffs are exempt employees under the "duties" test. EBMUD contends that all six qualify under the administrative exemption, and that three of the six-Bruce A. Lepore, William D. Kerr, and Thomas F. Fox — also qualify under the executive exemption.

1. The executive and administrative exemptions

a. The executive exemption

The requirements of the executive exemption are set forth at 29 C.F.R. § 541.1. An employee whose salary is more than $250 a week*fn1 qualifies for the executive exemption if that employee's primary duty consist of "management of the enterprise" in which she is employed "or a customarily recognized subdivision thereof."*fn2 In addition, the employee must customarily and regularly direct the work of two or more employees. See id.

Duties that may qualify a position as "management" for purposes of the executive exemption include i) interviewing, selecting, and training employees; ii) directing employees' work; in) appraising employees' productivity and efficiency for the purpose of recommending promotions or other changes in their status; iv) handling employee complaints and grievances, and disciplining when necessary; v) planning the work; vi) determining the techniques to be used; vii) apportioning the work among the workers; and viii) determining the type of materials, supplies, machinery, or tools to be used or merchandise to be bought, stocked, or sold. See 29 C.F.R. § 541.102.

To determine whether an employee has management as his or her "primary duty," the court may look at the amount of time spent on those duties. "In ordinary cases . . . primary duty means the major part, or over 50 percent, of the employee's time. Thus, an employee who spends over 50 percent of his [or her] time in management would have management as [the] primary duty." 29 C.F.R. § 541.103. Where an employee spends less than 50 percent of his or her time on managerial duties, the employee might still qualify under the executive exemption if other factors support such a conclusion. Those factors include

  the relative importance of the managerial duties as
  compared with other types of duties, the frequency
  with which the employee exercises discretionary
  powers, [the employee's] relative freedom from
  supervision, and the relationship between [the
  employee's] salary and the wages paid other employees
  for the kind of nonexempt work performed by the


b. The administrative exemption

The requirements of the administrative exemption are set forth at 29 C.F.R. § 541.2. An employee whose salary is more than $250 a week qualifies under the administrative exemption if first, that employee's primary duty is the performance of non-manual work "directly related to management policies or general business operations" of the employer or the employer's customers; and second, if the employee exercises "discretion and independent judgment." See 29 C.F.R. § 541.2 (a).

An employee performs work directly related to management policies or general business operations of the employer (i) if the employee is engaged in "administrative" rather than "production" activity, and (ii) if the administrative activity is of "substantial importance" to management or operations. See 29 C.F.R. § 541.205. Administrative work is the work performed by so-called white collar employees engaged in "servicing" a business — as, for example, "advising the management, planning, negotiating, representing the company, purchasing, promoting sales, and business research and control." 29 C.F.R. § 541.205 (b). Examples of employees in administrative positions include buyers in industrial plants and retail establishments; personnel analysts; and advisory specialists and consultants such as credit managers, safety directors, claims agents and adjustors, wage-rate analysts, tax experts, account executives at advertising agencies, stock brokers, and promotion people. See 29 C.F.R. § 541.205 (c)(1)-(c)(5).

"Production" or "line" work, by contrast, entails producing the product of the employer's business. Although the traditional model of production work is factory manufacturing or assembly-line work, the concept is not limited to the manufacturing setting. See, e.g., Martin v. Cooper Elec. Supply Co., 940 F.2d 896, 903 (3rd Cir. 1991), cert. denied, 503 U.S. 936, 112 S.Ct. 1473, 117 L.Ed.2d 617 (1992). Courts have frequently analogized from the factory setting to other work settings. See, e.g., Dalheim v. KDFW-TV, 918 F.2d 1220, 1226 (5th Cir. 1990) (producers, directors, and assignment editors in a television station "produce" newscasts, and thus are nonexempt workers); Cooper Elec., 940 F.2d at 903 (inside salesperson whose primary duty is to sell the employer's products performs production work); Gusdonovich v. Business Info. Co., 705 F. Supp. 262, 264-65 (W.D.Pa. 1985) (insurance claims adjustor who produces information for the company's clients performs production work).

  more in the nature of "representing the company" and
  "promoting sales" of John Alden products, two examples
  of exempt administrative work provided by [29 C.F.R.]
  § 541.205(b) . . . As John Alden's primary contact
  with the insurance market (via agent contacts),
  marketing representatives represent the company by
  keeping the market informed of changes in John Alden's
  product offerings and pricing structure. Further by
  advising agents as to which of John Alden's products
  to market against competing products, and by helping
  them to put together proposals for bidding on new
  business, marketing agents are engaged in "something
  more than routine selling efforts. . . ." Rather,
  their agent contacts are "aimed at promoting . . .
  customer sales generally," activity which is deemed
  administrative sales promotion work under section

Reich v. John Alden, 126 F.3d at 9 (citations omitted).

The John Alden court distinguished the Third Circuit's decision in Cooper Electric, where the court found that the salespeople for an electrical parts wholesaler were nonexempt because they were "production" employees. That is, because the company's primary purpose was to produce sales of electrical products, the salespeople were engaged in generating the very product that the company existed to market — the sales of electrical products. The court explained that in John Alden, by contrast, the insurance company actually produced a product of its own — insurance policies — and did not exist merely to produce sales of another company's policies. See id. In addition, in line with the "servicing" component of the interpretive regulations, see 29 C.F.R. § 541.205 (b), the John Alden court agreed with the Third Circuit's explanation that "servicing a business" entails "employment activity ancillary to an employer's principal production activity." Id. at 10 (citing Cooper Electric, 940 F.2d at 904).

The administrative exemption is further limited to employees who perform work of "substantial importance to management or operations." Work need not involve the formulation of management policies or the operation of a business as a whole, however, in order to qualify as work of "substantial importance."

  Employees whose work is "directly related" to
  management policies or to general business operations
  include those [whose] work affects policy or whose
  responsibility it is to execute or carry it out. The
  phrase also includes a wide variety of persons who
  either carry out major assignments in conducting the
  operations of the business, or whose work affects the
  business operations to a substantial degree, even
  though their assignments are tasks related to the
  operation of a particular segment of the business.

29 C.F.R. § 541.205 (c). Examples of such employees include those holding positions in personnel administration, labor relations, and research and planning, as well as those who provide assistance to management officials in carrying out their executive or administrative functions. See id.

The administrative exemption also requires that the exempt employee exercise "discretion and independent judgment" in his or her work. Discretion and independent judgment must be "real and substantial," that is, they must be exercised with respect to matters of consequence. 29 1023 C.F.R. § 541.207 (d)(1). The exercise of independent judgment involves "the comparison and the evaluation of possible courses of conduct and acting or making a decision after the various possibilities have been considered." 29 U.S.C. § 541.207(a). An employee who exercises independent judgment "has the authority or power to make an independent choice, free from immediate direction or supervision." Id.

The interpretive regulations emphasize that employees who merely apply their knowledge in following prescribed procedures or determining which procedure to follow, or who determine whether specified standards are met or whether an object falls into one or another of a number of definite grades, classes, or other categories are not exercising discretion and independent judgment. See 29 C.F.R. § 541.207 (c)(1). Such categories of nonexempt employees include inspectors or examiners such as graders of lumber or insurance appraisers, who rely on techniques and skills acquired by special training and experience, but who basically perform work along standardized lines involving well-established techniques and procedures. See 29 C.F.R. § 541.207 (c)2)-(4). Other examples include personnel clerks who screen job applicants based on their conformity with specific qualifications established by the employer, as contrasted with personnel officers who make hiring decisions or recommendations; or computer programmers, as contrasted with keypunch operators or programmer trainees. See 29 C.F.R. § 541.207 (c)(5), (7).

2. Whether the six plaintiffs are exempt*fn3

a. Ida A. McClendon

Plaintiff Ida A. MeClendon ("MeClendon") claims that she is entitled to overtime compensation for the period from September 4, 1990, to November 1, 1995. EBMUD contends that McClendon's claim should be ...

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