United States District Court, D. Maryland
K. Bredar, Chief Judge
Faustino Sanchez Carrera, Jesus David Muro, and Magdaleno
Gervacio filed suit against Defendants E.M.D. Sales, Inc.
("EMD"), E&R Sales and Marketing Services, Inc.
("E&R"), and Elda M. Devarie, alleging a
violation of the Fair Labor Standards Act, 29 U.S.C.
§§ 201 et seq. ("FLSA" or
"the Act"), for failure to pay overtime wages.
Plaintiffs seek back wages, liquidated damages, costs and
reasonable attorneys' fees, and a permanent injunction to
prevent Defendants from continuing to violate the FLSA. 29
U.S.C. §§ 216(b), 217. Now pending before the Court
are Defendants' Motion for Summary Judgment (ECF No. 97),
Plaintiffs' Cross-Motion for Partial Summary Judgment
(ECF No. 104), Plaintiffs' Motion to Seal Exhibit 15 of
Plaintiffs' Motion for Partial Summary Judgement (ECF No.
106), and Plaintiffs' Motion to Strike Defendants'
Summary Judgment Exhibits G9, G10, Gil and G12 in their
entirety and Exhibit G ¶¶ 14-17 (ECF No. 109). No.
hearing is required. See Local Rule 105.6 (D. Md.
2018). For the reasons set forth below, the Defendants'
Motion for Summary Judgment will be granted in part and
denied in part, Plaintiffs' Cross-Motion for Partial
Summary Judgment will be denied, Plaintiffs' Motion to
Seal will be denied, and Plaintiffs' Motion to Strike
will be granted in part and denied in part.
Carrera and Mr. Gervacio are sales representatives for EMD, a
company that distributes Latin American, Caribbean, and Asian
food products to stores throughout the Washington
metropolitan area. (Def. M.S.J. Mem. at 1, ECF No. 97-1; Pl.
M.S.J. Exh. 1 ¶ 1, Exh. 7 ¶ 1, ECF. No. 104.) Mr.
Muro worked as an EMD sales representative until August 2017.
(Pl. M.SJ. Exh. 8 ¶ 1.) Elda Devarie is EMD's
President and Chief Executive Officer. (Def. M.S.J. Exh. A at
4.) Ms. Devarie also owns E&R, a separate company which
provides EMD with merchandising services once EMD delivers
products to its customers. (Def. M.S.J. Mem. at 3; Pl. M.S.J.
Mem. at 6, Exh. 16 at 36, ECF No. 108.) Plaintiffs allege
that Defendants failed to pay them overtime wages pursuant to
the FLSA. Defendants argue that Plaintiffs are subject to the
FLSA's outside sales exemption, which exempts employees
from overtime pay so long as their primary duty is making
sales and they generally work outside of the office in
furtherance of those sales. 29 C.F.R. § 541.500(a).
representatives at EMD are represented by the United Food and
Commercial Works Union, Local 400 ("Union"). (Def.
M.S.J. Mem. at 2, Exh. B.) As provided in the Union Agreement
negotiated between the Union and Ms. Devarie, a sales
representative's entire salary derives from commissions
for the sale of EMD products. (Def. M.S.J. Exh. B at 12.)
Sales representatives spend most of their time outside of the
office visiting the stores on their route, and EMD does not
track the hours sales representatives work. (Def. M.S.J. Mem.
at 5, Exh. B at 12; Pl. M.S.J. Exh. 16 at 42, 45.) Twice a
week, EMD holds conference calls for the sales
representatives, which "are directed at specific EMD
products that should be pushed by the outside sales
representatives and other issues designed to help the sales
representatives increase their sales of EMD products to their
customers." (Def. M.S.J. Exh. G ¶ 8.) Sales
representatives also attend a sales meeting at EMD every
three weeks, which includes information on new EMD products
and products EMD is "pushing" to stores, as well as
updates on sales representatives' personal sales
performance. (Id. ¶ 7.)
provides food products to independent stores as well as
larger chain stores, such as Walmart and Giant Food.
(See, e.g., Pl. M.S.J. Exh. 2 ¶ 4, Exh. 12.)
EMD's sales representatives can try to open new accounts
by pitching EMD products to independent stores, thereby
adding stores to their sales route and increasing their
sales. (See Pl. M.S.J. Exh. 1 ¶ 31; Def. M.S.J.
Exh. C at 120:3-9.) At chain stores, by contrast, other EMD
employees, including Ms. Devarie and her son, Roberto
Devarie, establish the initial business relationship and
negotiate floor space for EMD products at that time. (Pl.
M.S.J. Exh. 1 ¶ 7. See also Pl. M.S.J. Exh. 2
¶ 12, Exh. 3 ¶ 12.) In addition to sales
representatives, EMD also employs key account managers, who
negotiate prices and space allotments with EMD's chain
store customers. (Pl. M.S.J. Exh. 1 ¶ 7.) Key account
managers also work to convince chain stores to purchase new
products from EMD in addition to those they already sell.
(Id.) At chain stores, the role of the sales
representative is to arrange products, stock and condition
shelves, take orders for new products, and try to obtain more
space for EMD on the salesfloor and thereby sell more
products. (Pl. M.S.J. Exh. 1 ¶¶ 3-7, Exh. 11.)
it is undisputed that EMD sales representatives have
unlimited ability to sell EMD products to independent stores
(see Pl. M.S.J. Exh. 16 at 72), the parties dispute
whether sales representatives can sell additional products or
gain additional shelf space at chain stores. Chain stores
rely on planograms, which are detailed maps of the products
on the salesfloor, to determine what products to sell and
where to place these products in the store. (See
e.g., Pl. M.S.J. Ex. 2 ¶ 6 (discussing planograms
at Giant Food), Exh. 12 ¶ 15 (discussing planograms at
Walmart), Exh. 3 ¶ 17 (discussing planograms at
Safeway).) These planograms are created at the corporate
level, and store managers have little to no leeway to alter
the placement or mix of products as dictated by the
planogram. (See, e.g., Pl. M.S.J Ex. 2 ¶¶
13, 15-16, Exh. 12 ¶ 15, Exh.3 ¶ 17.) Accordingly,
Plaintiffs state that only in "rare" situations are
sales representatives able to negotiate for more space to
sell additional products at chain stores. (Pl. M.S.J. Mem. at
4; see Pl. M.S.J. Exh. 7 ¶ 7.) Instead of
making their own sales at chain stores, Plaintiffs state that
they are simply taking orders to restock products or refill
space that was already sold by another EMD employee. (Pl.
M.S.J Exh. 1 ¶¶ 4-5, Exh. 7 ¶¶ 4-5, Exh.
8 ¶¶ 4-5.) Plaintiffs explain that over the last
five years they have spent at least 97% of their time
servicing chain stores, and that over 96% of their total
product volume ordered and stocked during this time has
derived from these chain stores. (Pl. M.S.J. Exh. 1 ¶ 2,
Exh. 7 ¶ 2, Exh. 8 ¶ 2, Exh. 9.) Therefore,
Plaintiffs argue, their ability to secure any sales on their
own is extremely limited. (Pl. M.S.J. Mem. at 3-4.)
contest this characterization of the sales
representative's job and provide declarations from other
sales representatives stating that they have been successful
in negotiating additional space for EMD products in chain
stores. (Def. M.S.J. Exh. D at 45-49.) Juan Pablo Barreno,
who has been a sales representative at EMD for twenty years,
testified he spends 80% of his time on sales, and only 20% on
"packing up" tasks. (Id. at 164:1-2.) He
testified that building relationships with store managers has
helped him to sell more EMD products. (Id. at
161-63.) Another sales representative, Mayra Palma, testified
that her relationship with the grocery manager also enabled
her to gain additional display space for EMD products at
Giant Food. (Def. M.S.J. Exh. F at 62-64.) Mr. Barreno
explained that while his ability to place more products on
the shelf at chain stores is limited due to planograms, he is
not limited in his ability to order additional products for
the floor. He explained that while the shelves can only hold
so much product, "we can create more space if we
want," and "if we can create a secondary location,
then we can send one case, twenty, thirty cases." (Def.
M.S.J. Exh. D at 153-54.) Mr. Barreno did note, however, that
over the last few years stores have started reducing the
amount of "back stock" they will hold for the floor
(id. at 154-55), making this more difficult.
crux of the parties' dispute is whether the primary duty
of sales representatives is to make sales. (Def. M.S.J. Mem.
at 3; Pl. M.S.J. Mem. at 3.) Plaintiffs state their primary
duty is not making sales, but rather is "perform[ing]
labor-intensive promotional activities which are incidental
to sales made by other EMS personnel at chain stores, such as
re-stocking, ordering and perform[ing] related functions,
including replenishing depleted product, physically stocking
product, conditioning space, and writing credits for expired
or damaged product they remove." (Pl. M.S.J. Mem. at
3-4; see also Pl. M.S.J. Exh. 1 ¶ 5, Exh. 11 at
9.) Defendants state that the primary duty of sales
representatives is making sales and that they are
"responsible for the sale of EMD products in their
assigned stores." (Def. M.S.J. Mem. at 3.)
the Court considers the merits of the parties'
cross-motions for summary judgment, the Court first considers
the parties' challenges to the proffered evidence.
Plaintiffs' Motion to Strike
have filed a motion to strike Exhibits G9-G12 and parts of
Exhibit G from Defendants' motion for summary judgment
and supporting memorandum of law. (Pl. Mot. Strike, ECF No.
109.) Exhibit G9 is a spreadsheet titled "Total Sales
Reps - Total Accounts," which contains the total dollar
amount of sales representatives' product sales for 2015
to 2018. (ECF No. 97-18.) Exhibit G10 is a report on sales
representatives' gross wages for 2015 to 2018 which
contains data on sales representatives' commissions
during those years. (ECF No. 97-19.) Exhibit Gil is a sales
report for another sales representative, Miguel Perez, for
the years 2014 to 2017. (ECF No. 97-20.) Exhibit G12 is an
email from Ivan Aguilar (an EMD employee) to Elda Devarie and
Carmen Perez (another EMD employee) containing what is
purportedly a list of new stores opened by the three
Plaintiffs. (ECF No. 97-21.) Plaintiffs argue that these
exhibits should be excluded under Federal Rule of Civil
Procedure 37 and Federal Rule of Evidence 1006. Defendants
argue that these exhibits are properly admissible business
also argue that Exhibit G ¶¶ 14-17, the Affidavit
of Freddy Urdaneta Olivares (ECF No. 97-9), should be
stricken because they contain lay opinion testimony which is
not based on Mr. Urdenata's personal knowledge, in
violation of Federal Rule of Evidence 701. (Pl. Mot. Strike
Mem. at 8-9.) Defendants contest this characterization of Mr.
Urdenata's affidavit and state that his responsibilities
as EMD's Sales Director demonstrate that he has personal
knowledge about the statements contained in his affidavit.
(Mot. Strike Resp. at 3-4, ECF No. 110.) The Court will
address each of these challenges in turn.
argue that Exhibits G9-G11 should be stricken because
Defendants refused to provide discovery into sales and
commissions made by sales representatives other than
Plaintiffs during discovery, even though Plaintiffs
specifically asked for this information. (Pl. Mot. Strike
Mem. at 1, 3.) Rule 37(c) states: "If a party fails to
provide information or identify a witness as required by Rule
26(a) or (e), the party is not allowed to use that
information or witness to supply evidence on a motion, at a
hearing, or at a trial, unless the failure was substantially
justified or is harmless." Though Defendants argue in
response that these exhibits should be admitted as business
records (Mot. Strike, Resp. ¶ 11), Rule 37 contains no
exception for business records. Fed. R. Civ. P. 37.
of evidence does not require "a finding of bad faith or
callous disregard of the discovery rules." S. States
Rack & Fixture, Inc. v. Sherwin-Williams Co., 318
F.3d 592, 596 (4th Cir. 2003). Though district courts have
"broad discretion" to decide whether a failure to
disclose was substantially justified or harmless, the Fourth
Circuit has held courts "should" consider five
(1) the surprise to the party against whom the evidence would
be offered; (2) the ability of that party to cure the
surprise; (3) the extent -to which allowing the evidence
would disrupt the trial; (4) the importance of the evidence;
and (5) the non-disclosing party's explanation for its
failure to disclose the evidence.
Id. at 597. As the parties who declined to
disclose-this information during discovery, Defendants bear
the burden to establish that nondisclosure was substantially
justified or harmless. Wilkins v. Montgomery, 751
F.3d 214, 222 (4th Cir. 2014).
discovery, Plaintiffs specifically asked for documents
containing information on sales representatives'
commissions and sales. (Pl. Mot. Strike Mem. at 3.)
Defendants argue that the information contained in Exhibits
G9-11 is not a surprise because Plaintiffs "had ample
opportunity to and did discover this information through the
voluminous ESI discovery that occurred in this case."
(Mot. Strike Resp. ¶ 3.) In support of this, Defendants
cite to the affidavit of Nicholas Blackmore, attached as
Exhibit 10 to Plaintiffs' cross-motion for summary
judgment, (Pl. M.SJ. Exh. 10.) Mr. Blackmore explains how he
made certain calculations based on "an Excel file"
Defendants produced which contained data related to sales
made by sales representatives from 2014 to 2015.
(Id. ¶¶ 5-6.) As Plaintiffs highlight, Mr.
Blackmore's affidavit refers to one document with
information from 2014 to 2015. (Mot. Strike Reply at 1-2.)
Defendants do not assert that any other information related
to non-Plaintiff sales representatives' sales or
commissions was produced during discovery, nor do they
identify any documents they produced which contain such
information. Instead, Defendants argue that Plaintiffs could
have deposed other sales representatives on these topics.
(Mot. Strike Resp. ¶ 10.) Not only did Plaintiffs not
have access to the data in question during the depositions,
but discovery had also been "effectively limit[ed] ...
to the Plaintiffs only" and Defendants affirmatively
redacted information about other sales representatives'
sales from the documents they did provide during discovery.
(Mot. Strike Reply at 3, Ex. B, Ex. C, Ex. D; Order, ECF No.
3 8.) The Court therefore finds that the factor of surprise
argues in favor of exclusion of these exhibits.
do not address any of the remaining factors. Defendants have
not offered any explanation for their failure to disclose
this information prior to the close of discovery and the
filing of summary judgment motions, which argues strongly in
favor of exclusion. Nor have Defendants addressed the ability
of Plaintiffs to cure the surprise, which Plaintiffs assert
would require re-opening discovery and further delaying
adjudication of this case. (Pl. Mot. Strike Mem. at 4).
Defendants also failed to address the disruption to the trial
schedule that would result from permitting such evidence to
be introduced at this point. While there is no trial
scheduled at this time, Defendants did not produce this
information until they filed their opening summary judgment
motion. Potentially re-opening discovery and allowing
supplemental briefing would likely delay the trial in this
matter, but since there is no trial date set this factor only
leans slightly in favor of exclusion. See e.g., Jones v.
Chapman, Civ. No. ELH-14-2627, 2017 WL 2266221, at *6-7
(D. Md. May 24, 2017) (finding no abuse of discretion in
striking an expert report produced seven months before trial
but only two weeks before summary judgment motions); MCI
Commc'ns Servs., Inc. v. Am. Infrastructure-MD,
Inc., Civ. No. GLR-11-3767, 2013 WL 4086401, at *9 (D.
Md. Aug. 12, 2013) (finding this factor was "split"
between the two parties when information was first produced
"in the midst of competing cross-motions for partial
summary judgment" but no trial date had been set).
Lastly, Defendants fail to address the relative importance of
the evidence at issue. Based on the Court's review of the
record, the Court does not find that these exhibits are
dispositive or would alter its conclusions. Other admissible
exhibits contain general information on sales
representatives' sales and commissions, which are
sufficient to inform the court that sales
representatives' commissions vary based on the products
they sell. (See, e.g., Def. M.S.J. Exh. B at 12.)
have failed to address most of the factors that courts
consider in determining whether to exclude evidence.
Accordingly, the Court finds that Defendants have failed to
meet their burden to demonstrate Exhibits G9-11 should not be
excluded under Rule 37. Because Defendants have not shown their
failure to produce this information during discovery was
substantially justified or harmless, the Court will grant
Plaintiffs' motion to strike Exhibits G9-G11 to
Defendants' motion for summary judgment.
G12 is an email from EMD employee Ivan Aguilar to Elda
Devarie and another EMD employee. Mr. Aguilar's email
contains several charts with data about new accounts opened
by the three Plaintiffs. Mr. Aguilar writes, "Below you
will find all the stores that were open in Retalix for each
sales rep." (Def. M.S. J. Exh. G12 at 1.) Defendants do
not provide a certification from Mr. Aguilar. Instead,
Defendants rely on a supplemental affidavit from EMD's
Sales Director, Mr. Urdaneta, to certify this document. (Mot.
Strike Resp. at 3, Exh. H.) In his supplemental affidavit,
Mr. Urdaneta states that "[Mr.] Aguilar specifically
references that the information was obtained through
'Retalix' which is a software application that EMD
uses to manage its data base [sic]. Information in EMD's
data base, like the information in Aguilar's e-mail to
Ms. Devarie, and the e-mail is kept in the ordinary course of
business and is accurate and reliable as a business
record." (Id. Exh. H ¶ 6.)
argue that Exhibit G12 should be stricken because it is an
unauthenticated, unsworn statement. (Pl. Mot. Strike Mem. at
6, 8.) However, exhibits need not be in admissible
form to be considered at summary judgment, provided they
could be put in admissible form. Fed.R.Civ.P. 56(c)(2);
Kurland v. ACE Am. Ins. Co., Civ. No. JKB-15-2668,
2017 WL 354254, at *3 n.2 (D. Md. Jan. 23, 2017). Here,
Plaintiffs do not allege that Exhibit G12 could not be made
admissible by trial, nor do Defendants provide any
information suggesting they would be unable to properly
authenticate this information. Because nothing suggests this
information could not be put in an admissible form at trial,
the Court denies Plaintiffs' motion to strike Exhibit
have also asked the Court to strike four paragraphs of Freddy
Urdaneta's affidavit (Def. M.S.J. Exh. G). Plaintiffs
argue that these paragraphs contain lay opinion testimony
which is not based on Mr. Urdaneta's personal knowledge.
(Pl. Mot. Strike Mem. at 8-9.) It is well established that
"summary judgment affidavits cannot be conclusory or
based upon hearsay." Evans v. Techs. Applications
& Serv. Co., 80 F.3d 954, 962 (4th Cir. 1996)
(citations omitted). Mr. Urdaneta's affidavit "must
be made on personal knowledge, set out facts that would be
admissible in evidence, and show that the affiant or
declarant is competent to testify on the matters
stated." Fed.R.Civ.P. 56(c)(4).
Urdaneta is the Sales Director and former Marketing Manager
for EMD. (Def. M.S.J. Exh G ¶ 2.) In this role, he says
he is "familiar with the various sales activities that
EMD uses to help support its outside sales representatives
sell more EMD products to independent stores and supermarket
chains, cash and carry wholesalers and restaurants."
(Id. ¶ 3.) Mr. Urdaneta explains he is
"personally familiar with the sales efforts and
performance of the Outside Sales Representatives who work at
EMD," and "[t]he performance of the Outside Sales
Representatives are regularly reviewed in EMD's Sales
Meetings and weekly conference calls." (Mot. Strike
Resp. Exh. H ¶ 3.) Mr. Urdaneta also explains,
"[a]s EMD's Sales Director, on a regular basis, I
review the individual sales performance of the individual
Outside Sales Representatives by tracking their sales through
EMD's sales records ... I can and do use information from
that data base to track an individual's sales to
EMD's customers." (Id. at ¶ 4.)
Court has held that an "affiant's personal knowledge
may be based on review of files, if the testimony states
facts reflected by the files and does not give
'inferences, opinions and surmises.'" Howard
Acquisitions, LLC v. Giannasca New Orleans, LLC, Civ.
No. WDQ-09-2651, 2010 WL 3834917, at *3 (D. Md. Sept. 28,
2010) (quoting Lee v. N.F. Invests., Inc., Civ. No.
99-426, 2000 WL 33949850, at *5 n.2 (E.D.Mo. Mar.15, 2000)).
However, the Fourth Circuit has cautioned that affidavits
based on the review of documents have "questionable
value" where there is not "direct, personal
knowledge of the underlying facts." Sutton v.
Roth, 361 Fed.Appx. 543, 550 n.7 (4th Cir. 2010).
explained above, the Court excludes Exhibits G9-G11 from
consideration under Rule 37. Accordingly, the Court will also
exclude Exhibit G ¶¶ 14-16 to the extent the
information within those paragraphs is based on Exhibits
G9-G11 and not Mr. Urdaneta's personal knowledge.
Fed.R.Civ.P. 37(c). On separate grounds, the Court also
strikes Mr. Urdaneta's statement in ¶ 15: "If
all of the outside sales representatives were only performing
the same merchandising services, there would not be such a
wide variation in the annual commissions earned by the
outside sales representatives." (Def. M.S.J. Exh. G
¶ 15.) Mr. Urdaneta stated during his deposition that he
does not track what component of sales representatives'
sales derive from their own personal efforts versus those
that derive from the efforts of other EMD employees to
negotiate space or sales. (Pl. M.S.J. ...