Palmieri v. Nynex Long Distance Co.

United States Court of Appeals
For the First Circuit

No. 05-1753

JAMES J. PALMIERI,

Plaintiff, Appellant,

v.

NYNEX LONG DISTANCE CO.,
d/b/a VERIZON ENTERPRISE SOLUTIONS,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE

[Hon. George Z. Singal, U.S. District Judge]

Before

Torruella, Circuit Judge,
Coffin, Senior Circuit Judge,
and Howard, Circuit Judge.

Robert W. Kline, with whom Kline Law Offices was on brief, for
appellant.
Victoria Woodin Chavey, with whom Robert C. McNamee, Douglas
W. Bartinik, and Day Berry & Howard LLP were on brief, for
appellee.

February 6, 2006
 TORRUELLA, Circuit Judge. Plaintiff-appellant James J.

Palmieri ("Palmieri") brought suit against his former employer,

defendant-appellee Nynex Long Distance Co. d/b/a Verizon Enterprise

Solutions ("Verizon"), claiming that he was eligible for overtime

pay for his work at the company. The district court granted

summary judgment for Verizon, and Palmieri here contests this

decision. After careful consideration, we affirm.

I. Facts

For nearly fifteen years, Palmieri worked for Verizon, a

large telecommunications vendor, and its corporate predecessors.

During his time at the company, he rose through the ranks and in

1997 attained the position of "Account Manager," later renamed

"Corporate Account Manager 3" ("CAM 3"). This is one of the

highest level sales positions at Verizon. Palmieri held this

position until his employment was terminated in August 2002.

As a CAM 3 working out of Verizon's office in Portland,

Maine, Palmieri sold products and services associated with high-

speed voice and data networks. He was expected to deal only with

a limited number of large customers. In particular, he was

assigned a module of 20 to 50 large customer accounts. He was not

permitted to call on customers who were not within his assigned

module. This meant that he needed to make repeat sales to the same

customers in his module.

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 To accomplish this, he had quarterly meetings, or

"planning sessions," with his customers. In these meetings, the

customers would state their general needs and goals, and Palmieri

would attempt to sell solutions to satisfy them. Palmieri also

entertained the customers in his module by taking them to lunch or

dinner, to Red Sox games, or to shows at the Wang Theater in

Boston. This was done so that Palmieri could maintain his

relationships and position himself well to make repeat sales to the

customers in his module.

To handle the difficulties associated with making sales

to large, institutional customers, Verizon provided CAM 3s such as

Palmieri with a great deal of institutional support. For example,

the company maintained a multi-tiered account team to address

customer-service issues. This team provided technical and

administrative support, so that the CAM 3s could focus their

efforts on sales.

Verizon also gave Palmieri and other CAM 3s tremendous

freedom in their daily routines. Palmieri, for example, was

responsible for all parts of the sales transactions, including

face-to-face client meetings, contract negotiations, and the

signing of sales contracts. He and other CAM 3s also were

permitted to set their own schedules based on their customers.

When asked about his schedule, Palmieri testified as follows:

I approached my job as an entrepreneur. This
was my business, these were my customers, and

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 I took full responsibility for that. And as
such, I would put in the amount of time
necessary to keep my customers happy as if
they were my business.

Verizon's only substantive restriction on CAM 3s such as Palmieri

was that they were required to visit with existing customers at

least once per quarter.

For his efforts at Verizon, Palmieri was handsomely

rewarded. Each year that he worked as a CAM 3, he earned a base

salary that ranged between $55,000 and $65,000. In addition, he

earned sales commissions. When his base salary and sales

commissions were combined, he earned $101,515.28 in 1998,

$95,127.67 in 1999, $103,361.09 in 2000, $77,022.27 in 2001, and

$33,164.22 for the first five months of 2002.

In 1998, Verizon had merged with Bell Atlantic, another

telecommunications company. As a result, a number of service and

implementation positions at Verizon were eliminated. Palmieri

thereafter received increased post-sale service implementation

responsibilities. He was also assigned a number of accounts,

originally sold by other CAM 3s, that had chronic service problems.

Many of these accounts provided Palmieri with no sales

opportunities, as the companies had already made it clear that they

had no intention of making further purchases from Verizon. With

these changes, Palmieri found that seventy percent of his daily

activities related to customer service problems. Moreover,

Palmieri was forced to remain in the office to deal with these

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issues, as this was the only means by which he could receive calls

from customers and make calls to Verizon's Network Operations

Center, the company's nerve center for resolving service-related

issues.

Palmieri was not happy with this turn of events and

complained to his superiors that with this new emphasis on

customer-service issues, he did not have enough time for sales.

This had little effect, however. Furthermore, in 2002, Palmieri's

sales quota was increased from $1 million to $5 million. This too

displeased him, as he thought that such a quota could not possibly

be met. After all, his module of accounts had never supported

sales in excess of $1 million. The changes eventually became

overwhelming for Palmieri, and in May 2002, he took a leave of

absence from Verizon. In August 2002, he was fired.

Approximately two years later, on June 7, 2004, Palmieri

filed this lawsuit in Maine state court. His complaint contained

four counts. Count I sought unpaid overtime wages pursuant to the

federal Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 207. Count

II alleged a violation of the Maine Prompt Pay Act, Me. Rev. Stat.

Ann. tit. 26, § 626. Count III sought unpaid overtime wages

pursuant to Maine law, Me. Rev. Stat. Ann. tit. 26, §§ 664(3) and

670. Count IV, finally, alleged spoliation of evidence. On or

about July 1, 2004, Verizon, pursuant to 28 U.S.C. § 1446, filed a

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notice of removal to have the proceedings removed to the United

States District Court for the District of Maine.

In federal court, the case was referred to United States

Magistrate Judge David M. Cohen. Following the close of discovery

on January 18, 2005, Verizon moved for summary judgment on each of

Palmieri's claims. Palmieri opposed summary judgment only with

respect to Count I (the FLSA claim) and Count III (the Maine

overtime claim).

Judge Cohen, in a thorough and well-reasoned opinion,

recommended that summary judgment be granted for Verizon on all

claims. The district court adopted this recommendation and on

April 22, 2005 granted summary judgment for Verizon. In this

appeal, Palmieri contests only the district court's resolution of

his claim for overtime pay under Maine law.

II. Discussion

We review the district court's entry of summary judgment

de novo. Cordero-Soto v. Island Fin., Inc., 418 F.3d 114, 118 (1st

Cir. 2005). "In conducting such review, we examine the summary

judgment record in the light most friendly to the summary judgment

loser, and we indulge all reasonable inferences in that party's

favor." National Amusements v. Town of Dedham, 43 F.3d 731, 735

(1st Cir. 1995).

Palmieri argues here that the district court incorrectly

found that he was not entitled to overtime under Maine law. In

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evaluating this claim, we note that the key statutory provision is

Me. Rev. Stat. Ann. tit. 26, § 663(3)(C), which states that

"[e]mployees whose earnings are derived in whole or in part from

sales commissions and whose hours and places of employment are not

substantially controlled by the employer" are not entitled to

overtime pay. Me. Rev. Stat. Ann. tit. 26, § 663(3)(C) (2005) (the

so-called "sales commission" exemption).

There has never been any question in this case that

Palmieri's earnings were derived, at least in part, from sales

commissions. As discussed above, Palmieri received a base salary

of $55,000 to $65,000 during the time he worked as a CAM 3, and his

income was supplemented each year with the money that he earned

through sales commissions. The district court found that Verizon

paid Palmieri $101,515.28 in 1998, $95,127.67 in 1999, $103,361.09

in 2000, $77,022.27 in 2001, and $33,164.22 for the first five

months of 2002. The difference between these figures and the base

salary was the result of sales commissions that Palmieri had

earned.

What is, and has been, at issue is whether Verizon

substantially controlled the hours and places of Palmieri's

employment. In the proceedings below, Palmieri, to support his

claim that the company had indeed exerted substantial control over

his hours and places of employment, pointed to how the nature of

his job changed after Verizon's merger with Bell Atlantic in 1998.

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Instead of working as he had as a sales representative responsible

for selling new products and services to potential clients, he

found that his primary function following the merger was ensuring

that service was delivered to Verizon's customers. He asserts that

by forcing him to handle additional service matters that required

him to stay in the office, the company substantially controlled the

hours and places of his employment.1 As a result, he argues that

he does not fall within the terms of the exemption and should have

received overtime pay.2

The district court rejected this argument, noting that

the Maine statute only raises the question of whether the employer

substantially controlled the employee's hours and places of work.

It did not raise the question of whether the employer adopted

policies or made assignments that substantially influenced the

1
As we already noted in our recitation of the facts, Palmieri had
argued that staying in the office was the only means by which he
could receive calls from customers and make calls to Verizon's
Network Operations Center. We find it incredible that a company
such as Verizon -- one that bases its entire business on high
technology -- would fail to make use of that technology and permit
its sales representatives to make the maximum use of their time by
allowing them to field service inquiries while they were off-site
attempting to make sales. Nevertheless, the district court found,
in a finding of fact, that Palmieri was forced to remain in the
office to deal efficiently with customer-service issues.
Therefore, we accept Palmieri's contention as true for purposes of
reviewing the district court's decision.
2
We note that there is no allegation here that the employer
imposed new duties that it knew would have the effect of
controlling the employee's time, but avoided doing so expressly in
order to evade the overtime law. The issues raised by such an
allegation are entirely different, and we do not address them here.

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manner in which the employee could conduct business (including

hours and work locations). Given this difference, and given

Palmieri's resulting failure to demonstrate that Verizon had, in

fact, substantially controlled the hours and places of his

employment, the district court held that Palmieri fell within the

terms of the exemption and was not entitled to overtime pay.

In this appeal, Palmieri advances the same argument he

made below and claims that the district court erred in finding that

his hours and places of employment were not substantially

controlled by his employer. For a number of reasons, we think that

the district court made the correct decision.

First, we do not believe that there was any "substantial

control" by Verizon. In addressing this issue, we first must

consider the proper method of interpreting Me. Rev. Stat. Ann. tit.

26, § 663(3)(C), the Maine law at issue here. Verizon argues that

we should look only at the plain text of the statute. Palmieri,

however, believes that we should look beyond the plain text and

explore the purposes behind the statutory provision by examining

other sources of information such as legislative history and

analogous federal statutes, regulations, and case law.3

We have consistently held that when the plain meaning of

a statute is clear, we are not to look beyond that text to discern

3
Both parties note that no court has yet interpreted Me. Rev.
Stat. Ann. tit. 26, § 663(3)(C).

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legislative intent. See, e.g., Bonilla v. Muebles J.J. Álvarez,

Inc., 194 F.3d 275, 277 n.2 (1st Cir. 1999) (When "the plain

meaning of the statute resolves the issue sub judice, we need not

rummage through the legislative history or search for other

interpretive aids."). In the instant case, however, there is a

portion of the Maine statute that contains some ambiguity --

namely, the words "substantially controlled." To determine what

the Maine legislature meant by such a phrase, we are willing to

adopt the approach advocated by Palmieri. See United States v.

Pub. Util. Comm'n of California, 345 U.S. 295, 315 (1953) ("Where

the words [of a statute] are ambiguous, the judiciary may properly

use the legislative history to reach a conclusion."); Gordon v.

Maine Cent. R.R., 657 A.2d 785, 786 (Me. 1995) ("When . . . a term

is not defined in either the relevant statutory provisions or in

prior decisions of this court, Maine courts may look to analogous

federal statutes, regulations, and case law for guidance.").

Looking first to the federal analogue of the Maine law,

the federal Fair Labor Standards Act, 29 U.S.C. § 207, and in

particular to the relevant exemption provision, 29 U.S.C. § 213

(a)(1), we see that employees categorized as exempt from the

overtime provision of the FLSA include "any employee employed . . .

in the capacity of an outside salesman (as such term is defined and

delimited from time to time by regulations of the Secretary [of

Labor]." 29 U.S.C. § 213(a)(1). Turning then to the regulations

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in effect during the relevant time frame to determine what is meant

by an "outside salesman," we learn that an "outside salesman" is

characterized solely by the relative percentages of time that he

spends on sales and other work. See 29 C.F.R. § 541.5 (2002). The

degree of control by the employer is a non-factor in determining

whether someone is exempt. Therefore, the examination of similar

federal legislation does little to help us determine the precise

meaning of the Maine statute.4

The legislative history of the Maine statute itself is

also of limited assistance. Although Palmieri, in his reply brief,

traces in detail the evolution of the language in the statute over

the years, see Reply Brief of Appellant 5-6, his discussion does

not shed light on what the Maine legislature might have meant by

its use of the phrase "substantially controlled."

Thus, although we have adopted the approach to statutory

interpretation advocated by Palmieri, we do not find it to be

helpful. We therefore find ourselves compelled to rely on the

plain meaning of the statutory language to determine whether, in

fact, Verizon "substantially controlled" the hours and places of

Palmieri's employment.

4
The district court agreed, noting that "the substance of Maine's
sales exemption differs significantly enough from that of its
closest analogue (the federal outside-sales exemption [in 29 U.S.C.
§ 213(a)(1)] that federal regulations and caselaw are not helpful
in construing it."

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 Maine's basic rules of statutory interpretation require

that words in a statute be given "their plain, common, and ordinary

meaning." Butterfield v. Norfolk & Dedham Mut. Fire Ins. Co., 860

A.2d 861, 862 (Me. 2004). "Control," the verb in the statute,

means "to exercise restraining or directing influence over" or "to

have power over." Merriam-Webster Online Dictionary,

http://www.m-w.com. "Substantially," the adverb modifying

"control," means "considerable in quantity" or "significantly

great." Id.5

Using these definitions as a guide, we simply do not see

how Verizon's oversight of Palmieri can be deemed "substantial

control." This was not a case where Verizon told Palmieri that he

had to be at his desk every day for a set number of hours in order

5
We wish to emphasize the Maine legislature's use of the word
"substantially." In his brief, Palmieri points to two other
states, Washington and California, that incorporate the element of
"control" in any determination of whether an employee is exempt
from receiving overtime pay. As Verizon correctly points out,
however, these statutes differ from the Maine statute at issue in
this case. Although the Washington and California statutes mention
"control," they do not contain the word "substantially" to modify
"control." The Washington statute uses the phrase "no control,"
thus tightly restricting the applicability of the exemption. See
Wash. Admin. Code 296-128-540 ("where . . . the employer has no
control over the total number of hours worked"). The California
provision contains no modifier whatsoever. See 8 Cal. Code Regs.
§ 11010(2)(G) ("subject to the control of their employer"). These
differences are not without consequence. See Mertens v. Hewitt
Assocs., 508 U.S. 248, 258 (1993) ("We will not read the statute to
render the modifier superfluous."); United States v. Nordic
Village, Inc., 503 U.S. 30, 36 (1992) (declining to adopt a
construction that would violate the "settled rule that a statute
must, if possible, be construed in such fashion that every word has
some operative effect").

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to answer service-related calls from customers. Rather than being

"substantially controlled," he was given substantial latitude to

work as he saw fit. He saw himself as an "entrepreneur" and noted

that he put in the amount of time necessary to keep customers

happy. Furthermore, he admitted that Verizon placed few controls

over his places of work. This hardly sounds to us like a person

who has his hours and places of employment controlled by the

employer, let alone "substantially" controlled.

To be sure, Verizon's decision to impose upon Palmieri

additional service-related responsibilities may well have

influenced the manner in which Palmieri could conduct business

(including hours and work locations). It may have required him to

come to the office more frequently to check if anyone called. If

a customer did call with a problem, he would have to stay and deal

with it. If, however, no one called, he could leave as he saw fit

and work on sales. The point is that he was not required by his

employer to sit at his desk every day and wait for customers to

call. He had substantial freedom each day to structure his hours

and places of employment. Although he may have had less freedom

than before the Bell Atlantic merger to structure his day, he still

was not under the substantial control of his employer. The

district court was therefore correct in stating that although

Palmieri's choices were impacted and circumscribed by Verizon's

assignments, the company plainly cannot be said to have

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substantially controlled his hours and places of work for purposes

of § 663(3)(C).

What undergirds this holding is our belief that

"substantially controlled" within the meaning of the statute

requires more specific direction on hours and places of employment

than was the case here. A contrary holding -- one in which we were

to agree with Palmieri and find that Verizon in this instance did

provide enough direction on hours and places of employment such

that Palmieri had his hours and places of employment "substantially

controlled" for the purposes of the statute -- could lead to

unworkable situations in which temporary assignments of new tasks

could move employees into and out of exempt status for brief

periods of time. If "substantially controlled" covered more than

what is explicitly required by the employer, claims could be made

at any time that a special, temporary work assignment made it

inconvenient or impossible for an employee to maintain the level of

his usual commission-based workload and effectively, though not

explicitly, required "attendance" during given days and hours. It

seems to us that drawing lines based on percentages of "effective"

control is wholly untenable. In the absence of any legislative

insight, we believe that it makes sense to confine the reach of

"substantially controlled" to those situations in which the

employer actually articulates specified work hours and locations.

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 The second, and related, reason we believe the district

court was correct is the ample record evidence that it was not the

employer that was controlling Palmieri's "hours and places of

employment" (as is required by the statute), but rather Palmieri

himself who was in control. Although Palmieri spent a great deal

of time on service-related issues, there are a number of

indications that this emphasis was by choice. For example, the

district court found that "Palmieri played an active role in

service-related issues and was more deeply involved than other

CAMs." If Palmieri was doing more in the customer-service arena

than what was expected of CAM 3s, a jury would have to conclude

that such "extra" work was by choice and was not imposed upon him

by Verizon.

The court also found that "Palmieri tried to maintain his

relationships with his customers by providing good service." This

desire to "maintain relationships" was, without a doubt, tied to

Palmieri's sales responsibilities and stemmed from the goal of

making additional sales to customers and earning additional sales

commissions. To counter the suggestion that he focused on service

issues by choice because he had something to gain, Palmieri notes

that providing good service would have had no effect on sales

relationships in a number of his accounts (e.g., Public Service of

New Hampshire, Desktek, and Laconia Savings Bank), because these

companies had already made clear their intent not to purchase

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additional products or services from Verizon. Attention to such

service-related accounts, he contends, was forced upon him by

Verizon.

Palmieri's attempt to negate the significance of the time

he allocated to customer service falls short, however, because even

if there were a number of accounts where he had no sales prospects,

he did have other accounts in which sales were possible and where

his emphasis on service issues would have gone a long way toward

helping him maintain these account relationships and earning

additional sales commissions. Thus, Palmieri's time spent on

service-related issues does not mean that the company exerted

control over him but was meaningful evidence of his own desire to

maintain and even expand the accounts.

Third, we are persuaded by Palmieri's own

characterization of the summary judgment calculus. Palmieri frames

the issue posed by summary judgment as whether there was any

prospect of sales. But, by his own admission, he spent at least

twenty percent of his time making sales, and a substantial portion

of his income each year came from the commissions earned as a

result of those sales. Clearly, then, there was at least some

prospect of Palmieri making sales. Thus, there remained no genuine

issue of material fact as to whether Palmieri had any prospect of

making sales.

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 For these three reasons, we think that the district court

was correct in holding that there was no triable issue as to the

substantiality of Verizon's control over Palmieri's hours and

places of employment, and that summary judgment on Palmieri's state

law claim was proper. Since we uphold the district court's

determination that Palmieri was not entitled to overtime pay under

the "sales commission" exemption under Maine law, we need not reach

Verizon's alternative argument that Palmieri is also exempt under

Maine's so-called "administrative" exemption. See Me. Rev. Stat.

Ann. tit. 26, § 663(3)(K) (2005).

III. Conclusion

For the reasons set forth above, we affirm the order of

the district court.

Affirmed.

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