Reply Brief — F.W. Webb Company, Petitioner v. Vincent N. Micone, III, Acting Secretary, Department of Labor

No. 24-626

In the Supreme Court of the United States

F.W. WEBB COMPANY,

Petitioner,

v.

VINCENT N. MICONE, III, ACTING SECRETARY OF LABOR,

UNITED STATES DEPARTMENT OF LABOR,

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the First Circuit

REPLY BRIEF FOR PETITIONER

HENRY LEAMAN

McDermott Will &

Emery LLP

444 W. Lake Street

Ste. 4000

Chicago, IL 60606

(312) 372-2000

JAMES M. NICHOLAS

McDermott Will &

Emery LLP

200 Clarendon Street

Boston, MA 02116

(617) 535-4000

PAUL W. HUGHES

Counsel of Record

ANDREW A. LYONS-BERG

McDermott Will & Emery LLP

500 North Capitol Street NW

Washington, DC 20001

(202) 756-8000

phughes@mwe.com

Counsel for Petitioner

TABLE OF CONTENTS

Table of Authorities.................................................... ii

Reply Brief for Petitioner ............................................ 1

Conclusion .................................................................. 6

ii

TABLE OF AUTHORITIES

Cases

Bothell v. Phase Metrics, Inc.,

299 F.3d 1120 (9th Cir. 2002) ............................. 3

Burton v. Appriss, Inc.,

682 F. App’x 423 (6th Cir. 2017)......................... 5

Cigar Ass’n of Am. v. FDA,

964 F.3d 56 (D.C. Cir. 2020) ............................... 2

Davis v. J.P. Morgan Chase & Co.,

587 F.3d 529 (2d Cir. 2009) ................................ 3

eBay Inc. v. MercExchange, LLC,

547 U.S. 388 (2006) ............................................. 2

Etelson v. Office of Personnel Mgmt.,

684 F.2d 918 (D.C. Cir. 1982) ............................. 5

Shaefer-LaRose v. Eli Lilly & Co.,

679 F.3d 560 (7th Cir. 2012) ........................... 3, 4

Verkuilen v. MediaBank, LLC,

646 F.3d 979 (7th Cir. 2011) ............................... 2

Rules and Regulations

29 C.F.R. § 541.201(a) ...................................... 1, 3, 4

Defining & Delimiting the Exemptions for

Executive, Administrative, Professional,

Outside Sales and Computer Employees,

69 Fed. Reg. 22,122 (Apr. 23, 2004) ................... 3

Other Authorities

Marc Linder, “Time And A Half's The

American Way”: A History Of The

Exclusion Of White-Collar Workers From

Overtime Regulation, 1868-2004 (2004) ............. 2

REPLY BRIEF FOR PETITIONER

As explained in the petition, the decision below

breaks both with other courts of appeals and with the

governing regulations to establish an extra-textual,

dispositive test for the FLSA’s frequently invoked administrative exemption: If an employee’s “primary

duty * * * is directly related to [the employer’s] business purpose,” then the employee is “ineligible for the

exemption,” period. Pet. App. 11a.

As we have described, however, the governing regulations say nothing of the sort. Instead, the question

posed by the regulations is whether the employee performs “management” or “general business operations”

functions—that is, whether the work is “directly related to assisting with the running or servicing of the

business” as a business—which does not turn on an

examination of the employer’s business purpose,

much less dispositively. 29 C.F.R. § 541.201(a). The

First Circuit’s dispositive business-purpose test is

therefore contrary to the regulations, and it conflicts

with other courts of appeals that apply similar considerations only as one of many non-dispositive factors.

In response, the government largely attempts to

recast this as a fact-bound dispute, but it cannot deny

the serious legal problems created by the First Circuit’s approach—not least of which is the absurd result that employees performing the exact same duties

at two different companies will be classified differently depending on how the court chooses to characterize their respective employers’ business purposes.

The government has no meaningful response.

The Court should take this case to clarify the

meaning of this critically important, frequently

2

litigated, yet “pretty vague” 1 and “absurdly complex” 2

regulatory text.

1. To start, the government’s quibbles with the circuit conflict we have described (BIO 12-13) fall flat.

Yes, the First Circuit uttered the words “not dispositive” in a footnote—as it must, since the regulation requires that treatment (see Pet. 19)—but it then went

on to apply the test in an obviously dispositive manner: “[T]he ISRs’ primary duty is to help sell Webb’s

products’ by delivering discrete customer sales, and

* * * this duty is directly related to Webb’s business

purpose of making wholesale sales of its products. The

ISRs are therefore ineligible for the exemption.” Pet.

App. 11a (emphasis added; quotation marks omitted);

see also ibid. (concluding its affirmative reasoning

with this single statement, then turning to rejecting

counterarguments). And obviously, “recit[ing] the

[correct doctrinal] test” is not sufficient if the court’s

actual “analysis cannot be squared” with governing

law. eBay Inc. v. MercExchange, LLC, 547 U.S. 388,

393 (2006); cf., e.g., Cigar Ass’n of Am. v. FDA, 964

F.3d 56, 61 (D.C. Cir. 2020) (“[S]tating that a factor

was considered—or found—is not a substitute for considering or finding it.”).

The same is true for the Seventh Circuit’s decision

in Schaefer-LaRose: The court quoted (in a footnote)

the Department of Labor’s correct statement of the

law, but then explained its own rule of decision in

purely categorical terms: “[W]hen an employee is

Verkuilen v. MediaBank, LLC, 646 F.3d 979, 981 (7th Cir.

2011) (Posner., J.)

1

Marc Linder, “Time And A Half’s The American Way”: A History Of The Exclusion Of White-Collar Workers From Overtime

Regulation, 1868–2004 880 (2004) (attributing this quotation to

Labor Secretary Elaine Chao).

2

3

engaged in the core function of a business, his or her

task is not properly categorized as administrative.”

Shaefer-LaRose v. Eli Lilly & Co., 679 F.3d 560, 574

& n.22 (7th Cir. 2012). And similarly in Davis, the Second Circuit found that application of its own “important distinction between employees directly producing the good or service that is the primary output

of the business” and those “performing general administrative work” led inexorably to non-exempt status:

“Accordingly”—that is, according to its focus on the

business’s purpose—“we hold that Whalen did not

perform work directly related to management policies

or general business operations.” Davis v. J.P. Morgan

Chase & Co., 587 F.3d 529, 535-537 (2d Cir. 2009) (emphases added). Compare, e.g., Bothell v. Phase Metrics, Inc., 299 F.3d 1120, 1127 (9th Cir. 2002) (rejecting “a formalistic parsing of the company’s ‘primary’

business purpose.”).

In other words, at best for the government, multiple courts of appeals applying the FLSA’s administrative exemption are saying one thing but doing something quite different—a situation that itself demands

correction.

2. On the merits, we explained that these courts’

dispositive focus on the nature of the employer’s business departs from the regulatory text, which simply

asks whether the employee performs “general business operations” functions “related to assisting with

the running or servicing of the business” (29 C.F.R.

§ 541.201(a)), not hinting at an inquiry that disqualifies employees if their tasks are deemed too related to

the business’s purpose or product. Pet. 14-18. And indeed, the 2004 amendments expressly directed courts

not to apply “the so-called ‘production-versus-staff’ dichotomy” as “a dispositive test,” contrary to the First

Circuit’s approach below. Defining & Delimiting the

4

Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, 69

Fed. Reg. 22,122, 22,140 (Apr. 23, 2004); see Pet. 1821. The government has little to say, other than to

deny that the First Circuit’s plainly dispositive analysis is actually dispositive. BIO 11-12; cf. Pet. App. 12a

(exemption unavailable because “Webb is a wholesaler, and ISRs make those wholesales.”).

We also highlighted the absurd result that flows

from treating the employer’s (judicially determined)

business purpose as the sole deciding factor as to an

employee’s exempt status: Employees performing the

exact same role will be classified differently depending

on how the court characterizes their respective employers’ business purpose—and this despite the regulation’s insistence that “the type of work performed by

the employee” should determine his or her exempt status. 29 C.F.R. § 541.201(a) (emphasis added); Pet. 2123; see Schaefer-LaRose, 679 F.3d at 574 & n.22 (acknowledging that under this approach, “sales representatives at a wholesaler” are non-exempt because

they “are engaged in the only production [that is,

sales] relevant to the employer’s business,” but sales

staff at “drug makers” are exempt because their “work

* * * is distinct from” “the development and production of pharmaceutical products”) (emphasis altered).

Tellingly, the government responds only to a

straw-man version of this argument. Of course it

makes sense to treat “[a]n underwriter at Chase” differently from “a clothing store accountant” (BIO 10)—

they can hardly be said to be doing the same job. What

does not make any sense, as we have described (Pet.

23), is deeming wholesalers’ sales staff categorically

non-exempt while the sales staff of manufacturers are

categorically exempt. The two employees do the exact

same job, and are of the exact same importance to

5

their respective employers (which make money only

through the efforts of the sales force). Yet under the

First Circuit’s dispositive analysis, one is entitled to

overtime pay, and the other is not.

It is axiomatic that “[g]overnment is at its most

arbitrary when it treats similarly situated people differently.” Etelson v. Office of Personnel Mgmt., 684

F.2d 918, 926 (D.C. Cir. 1982). To this, the government has no response.

3. Finally, the government makes a passing vehicle objection (BIO 14-15), but its point is not well

taken. As we have already explained (Pet. 21, 29), the

First Circuit discounted the ISRs’ substantial nonsales roles and responsibilities—including providing

consulting and concierge services to customers, advising Webb’s Outside Sales staff on technical matters,

and developing market intelligence and formulating

strategy with management (id. at 5-6)—precisely because it incorrectly viewed the correspondence between the ISRs’ “duty * * * to help sell Webb’s products” and “Webb’s business purpose of making wholesale sales” as dispositive of the administrative exemption. Pet. App. 11a. There is therefore every reason to

expect that the court of appeals could reach a different

result on remand, once disabused of the notion that

the employer’s business purpose is necessarily determinative.

Indeed, as we have described, other courts of appeals have held similar sales-plus roles—that is, sales

jobs that also involve substantial additional responsibilities like customer relationship management—to

satisfy the administrative exemption, notwithstanding the government’s simplistic observation that “selling a product” is a “paradigmatic example[]” of nonexempt work. BIO 15. Compare, e.g., Burton v.

6

Appriss, Inc., 682 F. App’x 423, 428 (6th Cir. 2017) (job

that “entailed * * * the selling of [employer’s] products” held exempt because sales were subsumed

within the “duty * * * to manage relations with, support, service, and be a liaison to, existing clients regarding their computer software needs”), with C.A.

J.A. 504 (ISRs “provid[e] advice and consultation” “to

[Webb’s] building professional customers * * * [to]

best enable them to meet their [own] customers’

needs”; and “promote and preserve customer relationships” through “frequent contact with Webb’s customer base,” in order to “maintain[] the pipeline of

transactions in the future” “even if” individual “interactions [do not] lead to a sale.”). See also Pet. 12-13 &

n.6 (collecting additional cases). And the government

can distinguish these cases (see BIO 14) only by disregarding the ISRs’ substantial advisory and strategic

non-sales functions—just as did the court of appeals.

The Court should thus grant certiorari to bring

clarity to an area of the law that is significantly muddled, both in doctrinal approach and substantive outcomes. The vehicle certainly poses no barrier to reaching the weighty legal issues presented here.

CONCLUSION

The Court should grant the petition.

7

Respectfully submitted.

HENRY LEAMAN

McDermott Will &

Emery LLP

444 W. Lake Street

Ste. 4000

Chicago, IL 60606

(312) 372-2000

JAMES M. NICHOLAS

McDermott Will &

Emery LLP

200 Clarendon Street

Boston, MA 02116

(617) 535-4000

PAUL W. HUGHES

Counsel of Record

ANDREW A. LYONS-BERG

McDermott Will & Emery LLP

500 North Capitol Street NW

Washington, DC 20001

(202) 756-8000

phughes@mwe.com

Counsel for Petitioner

FEBRUARY 2025