Bland v. Edward D. Jones & Co.
Bland v. Edward D. Jones & Co.
Opinion of the Court
Robert M. Dow, Jr., United States District Judge *968Plaintiffs Wayne Bland, Danuta Durkiewicz, David Bowles and Adam Reyes ("Plaintiffs") filed this putative collective and class action on behalf of themselves and all those similarly situated against Defendants Edward D. Jones & Co., L.P. and The Jones Financial Companies, L.L.L.P.; alleging violations of the Fair Labor Standards Act,
I. Background
Plaintiffs are all former Financial Advisors who worked for Defendants and participated in Defendants' Financial Advisor training program.
*969The contract provision in question, which the Court will refer to as the "training cost reimbursement provision" ("the TCR Provision"), states:
Upon execution of this Agreement and receipt of your can sell date from Edward Jones, you will be a financial advisor of Edward Jones. If, within three (3) years after receipt of your can sell date, your employment with Edward Jones is terminated by you or by Edward Jones, you maintain registration of your license with FINRA and accept employment with any entity as either an employee or independent contractor engaged in the sale of securities and/or insurance business, you agree to reimburse Edward Jones the reasonable cost of the training Edward Jones has provided you including, but not limited to, the cost of the selection and hiring. * * * You agree that the reimbursable amount bears a reasonable relationship to the computed damages Edward Jones would suffer from a breach by you and that Edward Jones will suffer demonstrable loss as a result of your breach. The amount you agree to reimburse Edward Jones is $ 75,000.00. There shall be no reduction in the amount of training costs owed by you in the event your employment is terminated during the first year of service as a financial advisor of Edward Jones. This obligation shall be reduced by $ 9,375.00 for each full quarter year of service beginning the thirteenth month of your employment as a financial advisor of Edward Jones. You must be employed by Edward Jones for each full quarter year in order to have your training cost obligation reduced according to the provisions of this paragraph.
[39-2, ¶ 21.] Each of the Plaintiffs also received a "Compensation Agreement," [35, ¶ 20], that provides a schedule of compensation for both their time as trainees and then as "New Financial Advisors", [39-3].
The training program comprises a 17-week "Study Calendar" period divided into two stages. [Id. ¶¶ 17-18.] During the first or "self-study" stage, trainees study for industry licensing exams using written online materials on computers loaned to them by Defendants." [Id. ¶ 18.] At the end of that stage, trainees take and must pass the FINRA Series 7 and 66 licensing exams.
The second or "door knock" stage, begins with one week of on-site training in either St. Louis, Missouri or Tempe, Arizona, followed by seven weeks of knocking on doors in a designated neighborhood to obtain individuals' contact information. [Id. ¶ 19.] This stage ends with another on-site week, designated as "Evaluation/Graduation,"
*970where Defendants determine whether trainees "can sell" to prospective clients. [Id. ]
During this Study Calendar period, trainees are paid on a bi-weekly basis. [Id. ¶ 20.] The trainees also qualify as overtime eligible. [Id. ] Although Defendants expect trainees to work 45 hours during the first stage and 60 hours during the second stage, the projected bi-weekly pay does not vary between the two periods. [39-3, at 2.] Rather, Defendants adjust the hourly rate between the two periods such that individuals like Plaintiffs are paid an almost identical amount in both periods.
Upon achieving "can sell" status, trainees become "new financial advisors" and Defendants classify them as overtime "exempt." [35, ¶ 23; 39-3, at 2.] Financial Advisors are salaried, though the salary begins to fluctuate based on performance after four months. [39-3, at 2-3.] However, a financial advisor's salary includes a "minimum guaranteed salary" ("MGS") that does not fluctuate and is paid regardless of performance. [Id. ] What amount of a financial advisor's salary is composed of MGS "is determined by the applicable federal and state guidelines where [the advisor's] branch is located." [Id. at 3.]
As new financial advisors, individuals such as Plaintiffs solicit "door knock" contacts to become clients. [35, ¶ 23.] They receive little training during this period, which primarily constitutes "access to a Regional Trainer and wholesaler presentations by 'preferred partner' firms whose products the Firm pushes [new financial advisors] to sell to clients." [Id. ] However, their primary duty is to sell financial products. [Id. ] In fact, Plaintiffs allege that Defendants instructed them to "sell these financial products without regard to the clients' individual needs, financial circumstances, or investment objectives." [Id. ¶ 85.] Nor were Plaintiffs placed in job positions "whose primary duty was to perform work directly related to the management or general business operations of Edward Jones or clients * * *." [Id. ¶ 86.]
Plaintiffs worked for Defendants at various offices around the country and at various periods between January 2014 and June 2016. [Id. ¶¶ 10-13.] They each signed the Financial Advisor Employment Agreement containing the TCR Provision.
In response to this conduct, Plaintiffs filed this purported collective and class action suit alleging multiple violations of the FLSA and various Illinois and Missouri statutes on March 13, 2018. See generally [1]. On June 12, 2018, Plaintiffs filed an amended complaint further detailing those claims. See generally [35]. On July 10, 2018, Defendants filed the instant motion to dismiss. [38.] The court now resolves the motion.
II. Standard
To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, the complaint first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), such that the defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly ,
III. Analysis
Plaintiffs allege five separate violations of the FLSA (Count I), a violation of the Illinois Wage Payment and Collection Act, 820 ILCS 115/1 et seq. (Count II), a violation of the Illinois Minimum Wage Law, 820 ILCS 105/1 et seq. (Count III), and a violation of the Missouri Minimum Wage Law, V.A.M.S. 290.500 et seq. (Count VI). In addition, Plaintiffs seek the rescission of the TCR Provision (Count IV) and the disgorgement of funds under a theory of unjust enrichment (Count V).
*972A. FLSA Claims
Plaintiffs allege five violations of the FLSA: (1) that the TCR Provision violated the FLSA's requirement to pay wages "free and clear;" (2) that enforcement of the TCR Provision would result in Plaintiffs' compensation falling below the minimum wage; (3) that Defendants failed to adequately pay the minimum wage or overtime while they were in non-exempt positions;
1. The TCR Provision
The FLSA requires a subject employer to pay its employees a minimum hourly wage, and to compensate its employees at one and one-half time the regular rate for a workweek longer than forty hours. See
Whether in cash or in facilities, "wages" cannot be considered to have been paid by the employer and received by the employee unless they are paid finally and unconditionally or "free and clear." The wage requirements of the [FLSA] will not be met where the employee "kicks-back" directly or indirectly to the employer or another person for the employer's benefit the whole or part of the wage delivered to the employee.
a. Plaintiffs lack standing to assert claims under the TCR Provision, and in any event, fail to state a claim
Because it is a threshold issue, the Court must address Defendants' standing argument first.
*973Article III of the Constitution confines federal courts to adjudicating actual cases or controversies. U.S. Const. art. III, § 2. Under Article III, a plaintiff must allege: (1) an injury in-fact; (2) fairly traceable to the defendant's action; that is (3) capable of being redressed by a favorable decision from the court. Parvati Corp. v. City of Oak Forest, Ill. ,
At first glance, Plaintiffs' standing appears tenuous. In all but one of the cases cited by the parties in which a court has reviewed a contract provision similar to the TCR Provision at issue here, the plaintiff had actually been deprived of a concrete dollar amount by the defendant. See Gordon v. City of Oakland ,
In Ketner , the named plaintiffs alleged that a provision of their employment contracts nearly identical to the TCR Provision violated the FLSA's minimum wage requirement and sought a declaratory judgment invalidating it.
Whether a plaintiff has "an objective and reasonable apprehension of future litigation" is one of the standards used by the Fourth Circuit to determine if a plaintiff has standing under the Declaratory Judgment Act ("DJA),
Here, Plaintiffs have alleged that Defendants sent some form of communication stating that they owe or demanding that they pay $ 75,000 as provided for by the TCR Provision, [35, ¶¶ 41, 50, 59], the validity of which Plaintiffs clearly dispute. However, unlike in Ketner , Plaintiffs have not alleged any facts suggesting that Defendants have (1) taken any steps to bring litigation against them, (2) ever actually collected money from individuals pursuant to the TCR Provision, or (3) even expressly threatened to file suit.
Plaintiffs invocation of the Supreme Court's decision in *975MedImmune, Inc. v. Genentech, Inc. ,
Turning to the substance of Plaintiffs' claims, Defendants maintain that Heder and Gordon should control the outcome in this case and require concluding in their favor. [62, at 2-6.] Plaintiffs argue that Heder actually supports their position, and that in any event this Court should follow the analysis laid out in Ketner , which questioned the applicability of Heder and viability of Gordon.
In Heder , the Eastern District of Wisconsin and then the Seventh Circuit evaluated the validity of an agreement between the City of Two Rivers and the city's firefighters under Wisconsin law. Heder v. City of Two Rivers ,
At the Seventh Circuit, the city conceded that Heder was entitled to keep "any compensation that the FLSA specified as a statutory floor below which no contract may go." Heder ,
Relying on Heder , the Ninth Circuit in Gordon concluded that the money that a police officer paid to the defendant city pursuant to a training reimbursement agreement did not constitute an illegal kickback under the FLSA.
The few district courts that have examined both Heder and Gordon have split in regard to whether a tuition reimbursement provision such as the one at issue here is actionable as a matter of law. In Ketner , the court concluded that Heder was inapposite as it had not actually held such an agreement was acceptable under the FLSA and that Gordon 's reliance on Heder was therefore misplaced.
By contrast, Park v. FDM Grp. (Holdings) PLC held that a "termination fee" which required a payment if an individual left within a certain amount of time after the completion of her training did not violate the FLSA.
This Court elects to follow Park , Gordon , and especially Heder , which constitutes controlling authority in this Circuit. As in Park , Plaintiffs explicitly agreed that the reimbursable amount "bears a reasonable relationship to the computed damages Edward Jones would suffer from a breach by you and that Edward Jones will suffer demonstrable loss as result of your breach." [39-2, ¶ 21.] Although the Court is somewhat skeptical that the actual costs of training totaled $ 75,000-especially considering that the contract explicitly notes that the $ 75,000 includes "the cost of selection and hiring"-the Court cannot infer from the contract that Defendants seek reimbursement for the tools of the trade or costs incurred in the performance of Plaintiffs' jobs. [Id. ] Nor is this case like Heder , in which the city withheld paychecks from the plaintiff and where the liquidated damages provision expressly attempted to claw back the compensation paid to the plaintiff.
Rather, like the tuition reimbursement provision of Heder , instead of requiring employees to pay for all the necessary training out of their own pocket, Defendants made an investment in their employees, but required the employees to repay at least part of that investment if they left before the company felt it had recouped fair value for its investment-which the company determined to take place over time at the rate of a 1/8 reduction in Plaintiffs' obligation every quarter they remained employed after the first year. [39-2, ¶ 21.] Moreover, unlike the purported training in Ketner , the training here did result in Plaintiffs' receiving portable credentials-namely, Series 7 and 66 licenses. [35, ¶¶ 18, 38, 46, 55.]
At bottom, the contract and the parties' performance pursuant to it resulted in Plaintiffs' accrual of a debt that Defendants are entitled to collect. See Heder ,
All the arguments that Plaintiffs raise against the TCR Provision-that $ 75,000 does not bear a rational resemblance to the costs Defendants actually incurred in their training, that Defendants used the threat of the TCR Provision to force Plaintiffs to work extra allegedly uncompensated time, etc. , see, e.g. [35, ¶¶ 24, 26]-are either potential defenses to the enforcement of the contract that Plaintiffs could *978raise if and when Defendants attempt to enforce the provision or possible reasons to invalidate the contract as a matter of state law. They are not reasons to find that the TRC Provision violates the FLSA. The TCR Provision does not violate the FLSA because it is not a kickback, but rather constitutes to a loan that Plaintiffs' accrued when they achieved "can sell" status. Consequently, any payment under the TCR Provision is not a kickback that would reduce the Plaintiffs' wages to below the statutory minimum wage.
Because Plaintiffs do not have standing to challenge the TCR Provision, and in any event fail to state a claim, the Court grants Defendants' motion as to Plaintiffs' claims in Count I regarding the TCR Provision. However, because the Court concludes that Plaintiffs lack standing based on the complaint as pled, the dismissal is without prejudice and with leave to replead.
2. Failure to Pay Minimum Wage & Overtime Prior to Achieving "Can sell" status
Plaintiffs also assert that they and all those similarly situated worked well in excess of 45-60 hours per week in the non-exempt positions and were not paid the minimum wage or overtime for those hours.
a. Plaintiffs fail to state a minimum wage claim
"Courts generally construe FLSA * * * wage claims to apply to the work-week unit." Hughes v. Scarlett's G.P., Inc. ,
[C]ourts uniformly calculate the hourly wage over the course of a workweek-i.e. , dividing the total compensation an employee received in a workweek by the compensable hours worked. Although the Seventh Circuit has not expressly addressed this issue, every circuit court that has considered the issue has utilized the workweek averaging approach to determine whether a FLSA violation occurred.
Hirst v. Skywest, Inc. ,
As in Hirst and Hughes , Plaintiffs have not provided a single allegation regarding what the Plaintiffs' effective hourly wages were during the relevant period, nor have they introduced any examples of the total compensation they received *979during any given workweek. Instead, they simply allege that they worked more than the hours that the training schedule called for, and that Defendants failed "to pay non-exempt FA Trainees wages and overtime for work they perforem[ed]." [35, ¶ 22.] The mere allegation that an individual did not receive compensation for all the hours that they worked is insufficient to state a FLSA violation. See Hirst , 2016 WL2986978 at *6. If Plaintiffs truly contend that Defendants failed to pay them the minimum wage, they need to allege facts to support a plausible claim that their effective hourly wages fell below the statutory minimum wage for at least one period. See, e.g., Labriola v. Clinton Entm't Mgmt., LLC ,
b. Plaintiffs fail to state an overtime claim
Similarly, to state a claim under the FLSA for failure to pay overtime, courts in this district generally require a plaintiff to plead some details beyond a bare allegation that he or she worked more than 40 hours without premium pay. See Trujillo v. Mediterranean Kitchens, Inc. ,
Thus, this Court, other courts in this district, and several courts of appeals have instructed that to state a claim for failure to pay overtime, " 'a plaintiff must sufficiently allege forty hours of work in a given workweek as well as some uncompensated time in excess of forty hours.' " Parks v. Speedy Title & Appraisal Review Servs. ,
Plaintiffs allegations do put Defendants on notice of the time periods during which Defendants failed to properly compensate them. Although Plaintiffs do not state the exact time periods at issue, it would be easy to determine the exact eight weeks that each of the Plaintiffs spent in the "study stage" and the nine weeks each participated in the "door-knocking" stage of their training with Defendants. However, Plaintiffs specifically allege that "Edward Jones neither tracks nor compensates FA Trainees
While this approaches the detail required to place Defendants on notice of a plausible claim, it is not quite sufficient to state a claim. Compare Brown ,
Brown or Hancox do not support a different conclusion. In Brown , the contracts at issue called for individuals to be on call for "17.5 hour shifts, seven days a week,"
*981and each of the individuals asserted that they "typically work or worked at least 85 hours a week" and that they were never paid any overtime.
By contrast, Plaintiffs simply allege that "[u]nder its policy and practice, Edward Jones knowingly discourages non-exempt FA Trainees from accurately reporting all of the hours they work" [35, ¶ 22], and that Plaintiffs accordingly did so [id. ¶¶ 38, 46, 55, 64]. However, Plaintiffs do not allege any facts detailing what, if any, specific pressure or policies led Plaintiffs to underreport their time,
3. Misclassification of "Can sell" Status
Plaintiffs also allege that they are entitled to overtime after they achieved "can sell" status and began working as financial advisors because Defendants' misclassified them as non-exempt. Defendants argue that Plaintiffs were not misclassified, and that in any event, Plaintiffs have not adequately alleged that they worked overtime during the relevant period.
As explained above, the FLSA generally requires employers to pay employees overtime for any hours worked over forty hours in a given week.
(1) [who are] [c]ompensated on a salary or fee basis at a rate not less than $ 455 per week * * * exclusive of board, lodging or other facilities;
(2) [w]hose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers; and
(3) [w]hose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
Generally, affirmative defenses-such as an employee's classification as exempt in the FLSA context-do not justify dismissal under Rule 12(b)(b). See Doe v. GTE Corp.,
a. Plaintiffs' fail to allege that they worked overtime
Before examining either of those claims, however, the Court must determine whether Plaintiffs' have adequately alleged that they worked overtime once they were classified as exempt given that for the affirmative defense to apply there must have been an underlying offense. See, e.g., Ottaviano v. Home Depot, Inc., USA ,
Under the standard elaborated above in Section III(A)(2), Plaintiffs have not alleged an overtime claim for the time that they worked after attaining "can sell" status. Plaintiffs simply allege (1) that they "routinely worked in excess of 40 hours per week after their 'can-sell' date, without receiving proper overtime pay" and (2) that each Plaintiff "[a]fter achieving 'can-sell' status, * * * continued to work long hours, well in excess of 40 hours per week * * *." [35, ¶¶ 24, 38, 46, 55, 64.] As the Court previously explained, without more, such formulaic and conclusory allegations are simply not enough to state a claim for overtime. Moreover, even if Plaintiffs had properly alleged an overtime violation after Plaintiffs achieved "can sell" status, they have not yet alleged facts to show that they were misclassified as exempt.
b. Plaintiffs' allegations do not show they fail the salary basis test
Plaintiffs allege that they were not paid a guaranteed, predetermined salary within the meaning of the regulations above because (1) Defendants "paid Plaintiffs and those similarly situated wages on the condition that Plaintiffs and those similarly situated pay 'training costs' up to $ 75,000 under certain circumstances" and (2) Plaintiffs' "wages were subject to reduction because of alleged variations in the quality or quantity of work performed." [35, ¶¶ 84-85.]
First, as explained above, the TCR Provision has no effect vis-à-vis the FLSA's wage and hours requirements. It is not a kickback of Plaintiffs' salaries, but a contractual debt owed by Plaintiffs. Thus, *983Plaintiffs cannot show that they fail the salary basis test by claiming their employment was subject to the TCR Provision.
Plaintiffs' citation to Ketner and the Department of Labor Opinion Letters that it addressed are unavailing. First, the Court has already explained why it disagrees with Ketner 's conclusion that the TCR Provision constitutes a kickback with implications under the FLSA. See Section III(A)(1) supra. Additionally, the Department of Labor Opinion Letters on which Ketner relied and that the additional letters cited by Plaintiffs also are unpersuasive. Each of the letters involved either a purposed deduction from an employee's paycheck to recover a previous payment that the DOL concluded did not constitute a loan or other inapposite situation. See U.S. Dep't of Labor, Wage & Hour Div., Opinion Letter (Nov. 27, 2006),
As explained above, nothing in Ketner or the DOL letters examined above convinces the Court that it should treat the TCR Provision as a kickback of the Plaintiffs' salaries designed to punish them if they failed to perform to a certain level. Rather, it is an education loan which only requires repayment if an individual attempts to use that education for the benefit of a competitor. As explained above, an employer may enforce such a provision without falling afoul of the FLSA. Plaintiffs therefore cannot ground their salary basis challenge on the TCR Provision.
Plaintiffs' second allegation likewise fails to plausibly allege that their compensation did not meet the salary basis test. While Plaintiffs reference a compensation plan in their complaint and allege that their compensation was contingent on performance and decreased within a few months of achieving "can sell" status during the transition to commission pay [35, ¶¶ 20, 23], that compensation plan-which Defendants attached to their motion-provides that Plaintiffs' compensation shall never fall below $ 455 a week. [39-3, at 3 (explaining that Plaintiffs are guaranteed at least $ 23,660 annually, or $ 455 a week).] The Court may properly consider such an exhibit attached to a motion to dismiss, Adams v. City of Indianapolis ,
*984c. Plaintiffs' allegations do not show they fail the job duties test
Plaintiffs allege that they do not meet the job duties test because their primary duties "did not include the exercise of discretion and independent judgment with respect to matters of significance." [35, ¶ 85.] Rather, they were encouraged "to sell [ ] financial products without regard to the clients' individual needs, financial circumstances, or investment objectives." [Id. ] Specifically, they were instructed to sell financial products, mostly Defendants' proprietary products and those pre-picked and designated as "preferred product partners," which generated additional fees for Defendants. See [id. ¶¶ 2-3]. Nor did Defendants place "Plaintiffs * * * in job positions whose primary duty was to perform work directly related to the management or general business operations of Edward Jones or its clients * * *." [Id. ¶ 86.] Plaintiffs assert that these allegations are enough to show that they did not perform such duties that would qualify them to be classified as exempt.
First, as the cases cited by Defendants show, determining whether an individual's actual job duties meet the requirements of the administrative exemption is a factually intense process. See, e.g., In re Morgan Stanley Smith Barney LLC Wage & Hour Litig. ,
Both cases cited by Plaintiffs for the proposition that their allegations are sufficient to plausibly state a misclassification claim contained more factual allegations than are present here. In Lloyd v. J.P. Morgan Chase , the plaintiffs put forward a declaration that detailed their typical day to day duties.
Here, Plaintiffs have not provided details about the type of environment in which they worked, what they did on a day *985to day basis, or any other details that would allow the Court to plausibly infer that they were not exempt. To the extent that Plaintiffs argue that their allegations explaining that their role was simply to sell financial products, the Court finds persuasive both the DOL opinion letters and opinions holding sales activities by licensed financial advisors are exempt because such sales inherently involve their professional judgment given FINRA's requirements. See, e.g., Hein ,
Because the Court concludes Plaintiffs have not adequately pled that they worked overtime once being deemed "exempt" or enough facts to plausibly establish that they were exempt, the Court grants Defendants motion as to Plaintiffs' misclassification claim in Count I, again without prejudice.
4. Recordkeeping
Finally, although Plaintiffs appear to concede in their briefing that there is no private right of action under the FLSA for violations of the that statute's recordkeeping requirements [59-1, at 27], it is well established that Plaintiffs cannot maintain a suit for recordkeeping violations under the FLSA. See Farmer v. DirectSat USA, LLC ,
5. Plaintiff Bowles
While the Court will allow Plaintiffs to file an amended complaint, it must dismiss Plaintiff Bowles with prejudice as to his overtime and misclassification claims in Count I. While the Court generally refrains from dismissing claims on the basis of an affirmative defense, such as the statute of limitations, Doe ,
B. The State Claims - Counts II-VI
Having granted Defendants' motion to dismiss the one federal claim over which it has original jurisdiction, the Court addresses whether to retain jurisdiction over the remaining state law claims, Counts II-VI.
IV. Conclusion
For the reasons explained above, the Court grants Defendants' motion to dismiss [38]. Plaintiff Bowles's claims in Count I are dismissed with prejudice, except as to any claims that relate to the TCR Provision, which are dismissed without prejudice. Plaintiffs' recordkeeping claim in Count I is also dismissed with prejudice. The remainder of Count I and Counts II-VI are dismissed without prejudice. Plaintiffs are given until April 15, 2019 to file an amended complaint consistent with this opinion. The case is set for further status on April 23, 2019, at 9:00 a.m.
For purposes of the motion to dismiss, the Court accepts as true all of Plaintiffs' well-pleaded factual allegations and draws all reasonable inferences in Plaintiffs' favor. Killingsworth v. HSBC Bank Nev., N.A. ,
While Plaintiffs refer to all those who have had "can sell" status for less than three years as "FA Trainees," [35, at 2 n.1], the Court will refer to those individuals who have achieved "can sell" status, such as Plaintiffs, as financial advisors and will only use "trainees" to refer to individuals who have not yet achieved "can sell" status.
Plaintiffs do not challenge Defendants' inclusion of a copy of the Financial Advisor Employment Agreement [39-2] and the related compensation agreement [39-3] that each of the Plaintiffs' agreed to with their motion to dismiss. Even if they had, as the Seventh Circuit explained in 188 LLC v. Trinity Indus., Inc. :
It is also well-settled in this circuit that "documents attached to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to his claim. Such documents may be considered by a district court in ruling on the motion to dismiss." Wright v. Assoc. Ins. Cos. Inc.,29 F.3d 1244 , 1248 (7th Cir. 1994). * * * While narrow, this exception is "aimed at cases interpreting, for example, a contract." [Levenstein v. Salafsky,164 F.3d 345 , 347 (7th Cir. 1998).]
While Plaintiffs allege that "Series 4 and 66 licenses are essential to the successful completion of the program, [35, ¶ 18], they fastidiously avoid alleging if or when Plaintiffs took them or when they passed. Despite that oversite, the Court infers that Plaintiffs must have taken them during the self-study period and passed given the TRC Provision of which they complain only applies if an individual leaves Defendants' employment, maintains their license, and takes a job that involves selling financial products within three years of receipt of their "can-sell" status. [39-2, ¶ 21.]
This "manipulation" involves lowering the "hourly rate" from $ 14.17 in the first stage, to $ 9.62 in the second stage. [39-3, at 2.]
Plaintiff Bowles claims to have worked for Defendants from January 2014 until June 2014. As explained below, this places him outside the statute of limitations for FLSA claims.
Additional facts are discussed below where relevant to the parties' arguments.
Plaintiffs response [59-1, at 20-22 (Section II(A) "Plaintiffs' Overtime Claims are Sufficiently Pled") ], only addresses whether Plaintiffs' have adequately alleged that they were entitled to overtime. It does not address whether Plaintiffs also stated a claim for a minimum wage violation. Consequently, the Court understands Plaintiffs as alleging only a failure to pay overtime during the non-exempt period, and not that plaintiffs also failed to receive the minimum wage. In any event, as explained below, Plaintiffs have not sufficiently alleged a minimum wage violation.
While Defendants do not describe it as such, the Court construes Defendants' standing arguments as a motion to dismiss the relevant claims under Rule 12(b)(1) and thus reviews those arguments under the Rule 12(b)(1) standard. In this case, Defendants have made a facial attack on standing because they assert Plaintiffs allegations are insufficient to establish injury-in-fact. See Murphy v. FT Travel Mgmt., LLC ,
Although Plaintiffs allege "Edward Jones's harassing conduct compels FA Trainees either to hire counsel or pay extortionate sums or both," [35, ¶ 30], there is not one allegation that any individual has actually paid $ 75,000 or any amount close to that or engaged an attorney (outside of this lawsuit). The absence of any specific instances in which any Plaintiff has retained counsel undermines the force of the general allegation set out in paragraph 30.
However, Plaintiffs' assertion that they have alleged an injury because Defendants used the threat of the TCR Provision to force them to work long hours, [35, ¶ 3], does not give them standing to challenge the TCR Provision. If Plaintiff's worked overtime hours for which they did not receive compensation, then they have a claim for insufficient wages which the Court examines in Sections III(A)(2-3), not a suit to invalidate a provision that no longer applies to them given that they are no longer in Defendants' employ.
In view of Plaintiffs' allegations that they worked more than the amount of hours set out by the training schedule set by Defendants and thus were not paid sufficient wages or overtime [see, e.g., 35, ¶¶ 22], the Court infers that Plaintiffs contend that the number of hours they worked, divided by their wages for that week, resulted in a per-hour pay of less than the minimum wage. Consequently, the Court has evaluated Plaintiffs' claim under the "workweek averaging approach."
As mentioned earlier, see supra n.2, it is difficult to know who exactly Plaintiffs are referring to in this allegation, given they define FA Trainee as anyone within three years of their "can sell" date to whom the TCR Provision applies, including those who have achieved "can sell" status and are therefore classified as exempt.
The generalized allegation that Plaintiffs worked excessive hours out of fear that they would be fired and therefore subject to the TCR Provision, can only support Plaintiff's claims after they achieved "can sell" status and therefore exempt from overtime requirements, given the requirements of the TCR Provision do not attach until one achieves "can sell" status.
In fact, the DOL held an almost identical compensation system for similarly situated individuals valid under the FLSA in one of the DOL opinion letters cited by Plaintiff. See U.S. Dep't of Labor, Wage & Hour Div., Opinion Letter (Nov. 27, 2006),
See, e.g., FINRA Rule 2111(a) (requiring members or associated persons to "have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer's investment profile.").
And if Defendants truly did require Plaintiffs to sell products in such a manner, the Court hopes that Plaintiffs would report such blatant violations of FINRA's regulations to FINRA.
To the extent that the factual allegations undergirding the recordkeeping claim is relevant to other claims, the Court considered them in the resolution of the motion.
In Wright v. Associated Ins. Cos. ,
Notwithstanding the dismissal without prejudice, Plaintiffs should seriously consider the possible effects of this Court's decision in Section III(A)(1) regarding the TCR Provision on certain of their state claims.
Reference
- Full Case Name
- Wayne BLAND, Danuta Durkiewicz, David Bowles and Adam Reyes, individually and on behalf of all others similarly situated v. EDWARD D. JONES & CO., L.P. and the Jones Financial Companies, L.L.L.P.
- Cited By
- 23 cases
- Status
- Published