Opposition Brief — Baum v. AstraZeneca LP

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Pee gd

O Y I geraenee me

\e No. 10-160

IN THE

Supreme Court of the Anited States

KRISTEN BAUM,

Petitioner,

wa

ASTRAZENECA LP,

Respondent.

On Petition For A Writ Of Certiorari

To The United States Court of Appeals

For The Third Circuit

BRIEF IN OPPOSITION

E. MICHAEL ROSSMAN MATTHEW W. LAMPE

ERIC E. MURPHY Counsel of Record

JONES DAY JONES DAY

325 John H. McConnell 222 Kast 41st Street

Blvd., Suite 600 New York, NY 10017

P.O. Box 165017 (212) 326-3939

Columbus, OH 43216 mwlampe@jonesday.com

(614) 469-3939

Counsel for Respondent AstraZeneca LP

RESTATEMENT OF QUESTIONS PRESENTED

Did the Third Circuit Court of Appeals correctly

interpret and apply the Pennsylvania Minimum

Wage Act (“Pennsylvania Act”), and Pennsylvania’s

implementing regulations, when the court concluded

that Petitioner Kristen Baum was exempt from the

Pennsylvania Act’s overtime requirements?

CORPORATE DISCLOSURE STATEMENT

Pursuant to Supreme Court Rule = 29.6,

Respondent makes the following disclosures:

Respondent AstraZeneca LP is a_ limited

partnership. Its general partner is AstraZeneca

Pharmaceuticals LP (99% interest), and its limited

partner is KBI Sub, Inc. (1% residual interest).

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TABLE OF CONTENTS

Page

RESTATEMENT OF QUESTIONS

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CORPORATE DISCLOSURE STATEMENT ........... il

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RESPONDENT'S BRIEF IN OPPOSITION ............. 1

RESTATEMENT OF THE CASE................. ccc ceee cece ee 2

REASONS FOR DENYING THE PETITION........... 6

I. THIS CASE RAISES NO FEDERAL

eat ica, wav acuusiianvavssiasensnasnadenes 6

IT. THE CASE PRESENTS NO

CONFLICT WITH THIS COURT'S

ise Ean earl lsass seuciandcéaaevers 8

Hl. THE COURT OF APPEALS’ OPINION

CONFLICTS WITH NO DECISIONS

FROM OTHER COURTS OF APPEALS...... 10

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TABLE OF AUTHORITIES

Page(s)

CASES

Auer v. Robbins,

B19 UF Be ada ieiaesavesescscisscscssceee. 1, 2, 8, 10

Bishop v. Wood,

426 U.S. 341 (1976) ..ccccccscccscscececscsscesscecscesssssseee 4

Cote v. Burroughs Wellcome Co., 558 F. Supp.

SES Cr eee iii kasessssvccccscccsccsccsccsccsceees iS)

Department of Labor & Industry, Bureau of

Labor Law Compliance v. Stuber,

822 A.2d 870 (Pa. Commw. Ct. 2003), aff'd,

859 A.Sd TAGES Cha, BOOE).....cccccccccccccsccveeees . 9

Equality Foundation of Greater Cincinnati,

Ine. v. City of Cincinnati,

B25 U.S, G49 CIGOBD ciccccssccccescsccescoscsscccesceccosssssee. ey

Hortonville Joint School District No. 7 v.

Hortonville Education Association,

BOG UF iia riicsccscesecccsccescccscccesseces %

Huddleston v. Dwyer,

SSD Ue, Meee HE hac ccesececcscccsccccccscsocecs nee [. 7

In re Novartis Wage & Hour Litigation,

__ F.8d __, No. 09-0437-ev, 2010 WL

2667337 (2d Cir. July 6, 2010).................006- 2.8 10

Pembaur v. City of Cincinnati,

OTE Fe acc cccccccsccccccccccccccccesecess 7

Reich v. John Alden Life Insurance Co.,

DE Fe rire cccccccccccccerccessccccsscecsss 5

Ruhlin v. New York Life Ins. Co..,

SOE UE nic cwscccscccscccesceces 2,10

TABLE OF AUTHORITIES

(continued)

Page(s)

Smith v. Johnson & Johnson,

593 F.3d 280 (3d Cir. 2010)... 6,9

STATUTES

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Fair Labor Standards Act,

29 U.S.C. § 201 et seg.... |

Pennsylvania Minimum Wage Act,

43 Pa. Cons. Stat. § 333.101 et seq

43 Pa. Cons. Stat. § 333.104(c) Ace Ra 2

43 Pa. Cons. Stat. § 333.105(a)(5) 2.6

REGULATIONS & RULES

29 C.F.R. § 541.200(a)(3) i)

34 Pa, Code § 231.83 ............ ee oer he | 6, 10

34 Pa. Code § 231.83(1) @ ee e 3, 5

34 Pa. Code § 231.83(5). 3,9

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34 Pa. Code § 231.85(1)......... ee 3

ta. GE. Be. ORD occccccsceess a 6

OTHER AUTHORITIES

Kugene Gressman et al., Supreme Court

Practice § 4.10 (9th ed. 2007)................0...0. are

BRIEF IN OPPOSITION

This case presents state-law issues: the scope

and interpretation of the Pennsylvania Act, 43 Va

Cons. Stat. § 433.101 ef seqg., and the implementing

regulations to the Pennsylvania Act; and whether,

under the Pennsylvania statute and regulations,

Petitioner Kristen Baum, a former Sales Specialist

with Respondent AstraZeneca LP, satisfied the

State’s administrative exemption and/or outside

salesperson exemption to the Pennsylvania Act's

overtime requirements. ‘Those state-law questions

do not raise a federal issue. Nor does the court of

appeals’ answer below to those questions conflict

with either this Court’s precedent or precedent from

other courts of appeals. Indeed, neither this Court,

nor any court of appeals (outside of this case), has

ever examined the Pennsylvania statutes and

reyulations at issue here. And, in all events, since

this Court “dofes] not review... questions of state

law,” Huddleston v. Dwyer, 322 U.S. 242, 237 (1944),

the Court should deny Baum’s petition for a writ of

certiorari.

This case is that simple. Nevertheless, in

attempting to overcome the obvious defects in her

petition, Baum suggests that this case is rea//y about

the Fair Labor Standards Act (“FLSA”), 29 U.S.C

§ 201 et seqg., and, specifically, the deference due an

amicus brief filed by the U.S. Secretary of Labor in a

different case (one that did not involve Baum,

AstraZeneca, or Pennsylvania law). But Baum

misses the mark. Since this 1s a diversity case, state

law determines the weight Gf any) due a US

Department of Labor litigation position. And,

contrary to Baum’'s apparent suggestion, Auer v

Klobhins, 519 USS. 452 (1997), does not suppest

otherwise. Auer did not involve Pennsylvania law

and neither it nor any other prior case has addressed

whether, in interpreting VPennsylvamai law, the

Supreme Court of Pennsylvania might give some

level of deference to a US. Department of Labor

amicus brief addressing FLSA matters in a different

CASE

Similarly, contrary to Baum’'s claims, this case

does not create a circuit split with Ja re Novartis

Wave & Hour Litiyzation, od No, 09-0437

cv, 2010 WL, 2667337 (2d Cir, duly 6, 2O1O)): the

Novartis case involved the FLSA, not Pennsylvania

law. See ad at *1. Morcover, even af Novartis had

involved the appheation of Pennsylvania law (which

both sides agree that at did not), that would not

chanye the outcome of Baum’s petition. Rather, as to

questions controlled by state liw (ike this ease is),

conflict amonp circuits does not present a reason for

yranting a writ of certioran. C7 Ruhlin ve New York

hale Ins. Co., 8304 ULS, 202, 206 (195%)

At day's end, then, this case involves state-law

issues, and only state-law issues. ‘The Court should

deny the petition for a writ of certiorari

RESTATEMENT OF THE CASE

!. The Pennsylvania Act requires employers to

pay overtime to their employees. 44 Pa. Cons, Stat

8 355.104(c). It also sets forth several exceptions to

its overtime rules. Specifically, and among other

things, the Pennsylvania Act exempts employees

who work in “the capacity of outside sales|person)” or

“liln a bona fide administrative capacity.” /d

§ 333.105(a)(5).

The State’s outside salesperson exemption covers

an employee who is “regularly engaged more than

80% of work time away from the employer’s place .. .

of business” “[mJaking sales, including any sale,

exchange, contract to sell, consignment for sale, or

other disposition or selling.” 34 Pa. Code § 231.85(1).

The Pennsylvania administrative exemption

covers an employee (1) “who is compensated .. . at a

rate of not less than $250 per week”; (2) “[w|hose

primary duty consists of the performance of office or

nonmanual work directly related to management

policies or general operation of his employer”; and

(3) whose job “includes work requiring the exercise of

discretion and independent judgment.” Id.

§ 231.83(1), (5).

2. This case concerns whether these state-law

exemptions apply to an AstraZeneca Sales Specialist.

For its part, AstraZeneca researches, develops, and

manufactures pharmaceutical products. Pet. App.

23a. The Company relies on Sales Specialists to

generate sales for those products that may be

purchased only with a prescription. /d. at 6a, 23a.

Each prescription results in a sale, and Sales

Specialists bring about sales by calling on physicians

(the effective decisionmakers in the © sales

transaction) and persuading them to prescribe the

products for appropriate patients. Jd. at 6a, 23a,

25a.

Baum worked as a Sales Specialist until 2006.

Id. at 23a. The position was a natural fit for her.

She became a Sales Specialist in May 2003 because

she “always wanted to be in sales.” J/d. at 23a. Once

in the position, she “worked in the field alone most of

her time,” 7d. at 25a, 9a, seeking to increase market

4

share for her products by making calls on physicians.

Id. at 24a. In working to “build relationships,” zd. at

24a, Baum had “significant discretion in how she

would approach physicians,” rd. at 17a. She engaged

in “personal selling,” zd. at 24a, using “innovative

themes,” sd. at 8a. Near the end of each call, Baum

asked the doctor for a commitment to order

AstraZeneca’s products for appropriate patients. /d.

at 25a. She was successful in these efforts, and the

Company provided her a $63,000 salary, with the

opportunity to earn a sales-based bonus on top of this

amount. Jd. at 25a—26a.

3. On March 27, 2007, Baum filed this suit in

state court, seeking overtime pay under the

Pennsylvania Act. /d. at 22a. AstraZeneca removed

the suit to the Western District of Pennsylvania. /d.

The district court had diversity jurisdiction under 28

U.S.C. § 1332. See Pet. App. at 22a—238a.

a. The district court granted summary

judgment to AstraZeneca. It held that Baum fell

within the Pennsylvania Act’s outside salesperson

exemption. /d. at 32a—54a. The court found that

Baum made_ sales by obtaining physician

commitments to order pharmaceuticals for approved

uses. Jd. at 42a—43a. In the alternative, the court

pointed out that it “would likely find” that Baum fell

within Pennsylvania’s administrative exemption. Jd.

at 55a—56a.

b. The Third Circuit Court of Appeals affirmed

based on Pennsylvania’s administrative exemption.

Id. ai lla. It began by noting that the exemption’s

“salary requirement of $250 per week was

indisputably satisfied.” Jd. at 7a. It next found that

Baum “performljed] . . . nonmanual work directly

related to. AstraZeneca’s general operation.” Pet.

App. at 7a; see also 34 Pa. Code 231.83(1).

Specifically, Baum “disseminat[ed] information to

the marketplace [and increased] understanding [of]

customers and competitors” by visiting physicians

and organizing events. Pet. App. at 8a (quoting

Reich v. John Alden Life Ins. Co., 126 F.3d 1, 12 (1st

Cir. 1997)).

As to whether Baum’s work included discretion,

the court concluded that “Baum’s’ day-to-day

interactions with physicians required her to exercise

a significant amount of discretion and independent

judgment.” Pet. App. at 19a. The record showed

that “[e]very visit was somewhat unique because

each physician had different preferences, interests,

and availability.” /d. at 9a. As such, Baum needed

to constantly “change her promotion strategy,” zd. at

8a, and she needed to “decide[] how much time she.

would spend with a given physician depending on

whether the physician was interested in her

product,” id. at 9a. The court thus concluded that

“lo]verall, Baum’s day-to-day activities involved

making numerous independent judgments on how

best to promote AstraZeneca’s products.” Jd.

In reaching its conclusions, the court discussed

FLSA administrative - exemption authority in

addition to Pennsylvania statutes, regulations, and

cases. In doing so, the court cited a Pennsylvania

decision for the proposition that Pennsylvania courts

have looked to federal cases regarding the FLSA for

guidance in applying the Pennsylvania Act. See id.

at 7a n.4. The court further noted that Baum’s

duties were similar to the duties of a_ sales

representative that it found exempt from the FLSA

6

in Smith v. Johnson & Johnson, 593 F.3d 280 (3d

Cir. 2010). See Pet. App. 9a-10a.

c. The court of appeals summarily denied

Baum’s petition for rehearing en banc, id. at 2a, and

has since denied her petition to recall the mandate.

REASONS FOR DENYING THE PETITION

This Court will grant a petition for a writ of

certiorari “only for compelling reasons.” Sup. Ct. R.

10. For example, certiorari may be appropriate if “a

United States court of appeals has decided an

important question of federal /aw that has not been,

but should be, settled by this Court.” /d. at 10(c)

(emphasis added). Likewise, certiorari might be

warranted if a court of appeals “has decided an

important federal question in a way that conflicts

with relevant decisions of this Court,” za. (emphasis

added), or the decision of another court of appeal, see

1d. at 10(a).

This case, however, presents no such compelling

grounds. Rather, the Court should deny Baum’s

petition for a writ of certiorari for at least three

reasons. first, the petition raises only issues of

state, not federal, law. Second, the court of appeals’

interpretation of state law presents no conflict with

this Court’s precedents. Third, the court of appeals’

Pennsylvania-law ruling does not conflict with the

decision of any other court of appeals.

I. THIS CASE RAISES NO FEDERAL QUESTION

Baum seeks a writ of certiorari for this Court to

resolve the meaning of the Pennsylvania Act and its

exemptions. See 43 Pa. Cons. Stat. § 333.105(a)(5);

34 Pa. Code §§ 231.83, -.85. This case thus raises no

federal question. See Sup. Ct. R. 10.

A federal court of appeals’ handling of a state-

law issue provides no grounds for a writ of certiorari.

To the contrary, the Court “do/es/] not review, save in

exceptional cases, the considered determination of

questions of state law by the intermediate federal

appellate courts.” Huddleston v. Dwyer, 322 U.S.

232, 237 (1944) (emphasis added); see also Equal.

Found. of Greater’ Crneinnati, Ine. v. City of

Cincinnati, 525 U.S. 943, 944 (1998) (Stevens, J.,

respecting denial of petition for writ of certiorari)

(“This Court does not normally make an independent

examination of state-law questions that have been

resolved by a court of appeals.”). Indeed, when it

comes to state law, the Court not only refuses to

review courts of appeals’ decisions, but also

“accord|s] great deference to the interpretation and

application ... by the courts of appeals.” Pembaur v.

City of Cincinnati, 475 U.S. 469, 484 n.13 (1986)

(emphasis added); see Bishop v. Wood, 426 U.S. 341,

345-46 (1976).

Under these principles, Baum plainly has not

identified any valid basis for a writ of certiorari.

The instant state-law matter implicates no federal

constitutional questions, nor does it otherwise

present “extraordinary” circumstances that might

suggest a need for this Court’s involvement in a

diversity case. See Eugene Gressman et al.,

Supreme Court Practice § 4.10, at 261-62 (9th ed.

2007) (noting “the Court’s current lack of interest in

reviewing diversity cases where the only issue is the

consistency of the court of appeals decision with

applicable state substantive law”). For this reason

alone, the petition should be denied.

8

il. THE CASE PRESENTS NO CONFLICT WITH

THIS COURTS DECISIONS

To downplay that her petition raises nothing

more than a state-law issue, Baum argues that the

court of appeals’ decision “contravened well-

established precedent by this Court.” Pet. 15.

Specifically, she claims that this Court’s decision in

Auer v. Robbins, 519 U.S. 452 (1997), required the

court of appeals to construe Pennsylvania state law

in strict accordance with positions adopted by the

U.S. Department of Labor in an amicus brief

addressing FLSA issues in another case.! Pet. 13-15

(referencing the U.S. Department of Labor’s amicus

brief in Jn re Novartis Wage & Hour Litig., ___ F.3d

, No. 09-0437-cev, 2010 WL 2667337 (2d Cir. July

6, 2010)).

Baum is mistaken. Neither Auer nor any

decision from this Court has ever concluded or even

suggested that a federal agency’s litigation position

(in another case no less) controls the application of

state law. See Auer, 519 U.S. at 461 (deferring to

federal agency’s interpretation of its “own [federal]

regulations”) (emphasis added). Nor could the Court

adopt such a rule. Like other federal courts, this

Court is “bound to accept the interpretation of [state]

law by the highest court of the State.” Hortonville

Joint School Dist. No. 1 v. Hortonville Educ. Assn.,

426 U.S. 482, 488 (1976).

Thus, whether a U.S. Department of Labor’s

FLSA litigation position in a separate case carries

even persuasive power in this diversity matter (let

| The U.S. Department of Labor filed no amicus brief in this

state-law case.

9

alone whether it is entitled to any level of deference)

is a pure state-law issue. In fact, the Pennsylvania

courts have yet to address this issue. At most,

Pennsylvania courts have found it proper to look to

federai interpretation of the FLSA when construing

the Pennsylvania Act. Dept of Labor & Indus.,

Bureau of Labor Law Compliance v. Stuber, 822 A.2d

870, 873 (Pa. Commw. Ct. 2003) (examining “federal

case law”), affd, 859 A.2d 1253 (Pa. 2004); compare

29 C.F.R. § 541.200(a)(3) (covering those whose job

includes “the exercise of discretion and independent

judgment with respect to matters of significance’)

(emphasis added), with 34 Pa. Code § 231.83(5)

(covering those whose job “includes work requiring

the exercise of discretion and _ independent

judgment”). Consistent with this guidance, the

Third Circuit Court of Appeals below reasonably

supplemented its decision with reference to the

court’s interpretation of the FLSA in the Smith

decision (which, in turn, invoked long-standing FLSA

decisions such as Cote v. Burroughs Wellcome Co.,

558 F. Supp. 883 (E.D. Pa. 1982)). But no

Pennsylvania case — let alone a Supreme Court of

Pennsylvania decision — has ever examined the

weight (Gf any) that should be accorded a USS.

Department of Labor FLSA J/tigation position in

construing the Pennsylvania Act (and thus Baum

cannot claim that the court of appeals decided

contrary to any such Pennsylvania case).

In sum, this Court has never interpreted the

Pennsylvania Act, and it has never required federal

courts to defer to federal agency litigation positions

(on federal law questions) when interpreting state

law. As such, Baum is wrong to suggest that the

court of appeals’ resolution of state-law issues in this

10

case somehow departed from the Court’s precedents.

To the contrary, both the interpretation of the

Pennsylvania Act and questions of any deference due

the U.S. Department of Labor’s FLSA hitigation

positions (in other cases) are state-law issues that, as

described above, present no grounds for a writ of

certiorari.

Ii. THE COURT OF APPEALS’ OPINION

CONFLICTS WITH NO DECISIONS FROM

OTHER COURTS OF APPEALS

In a second attempt to cloud the pure state-law

question at issue here, Baum claims that the court of

appeals’ failure to give Auer deference to the U.S.

Department of Labor’s amicus brief in Novartis has

“resulted in a schism between the Second Circuit and

Third Circuit courts of appeals.” Pet. 16.

Baum is again wrong. As she concedes, see

Pet. 16, the Novartis case did not involve the

Pennsylvania Act. See 2010 WL 2667337, at *1, *15.

As such, it could not create a conflict as to the proper

meaning, interpretation, or application of the

Pennsylvania Act. Indeed, aside from the court of

appeals below, no other court of appeals has ever

interpreted the state regulations at issue. See 34 Pa.

Code §§ 231.83, -.85. In short, there is no circuit

split for this Court to review.

Furthermore, even if Novartis had involved

Pennsylvania law (which it did not), this would still

not provide a basis for granting certiorari in this

case. Circuit court disagreement on state-law issues

is not a grounds for this Court’s review. Cf Ruh/lin v.

New York Life Ins. Co., 304 U.S. 202, 206 (1938) (“As

to questions controlled by state law ..., conflict

among circuits is not, of itself, a reason for granting

11

a writ of certiorari.”). That rule applies in full here.

Baum’s petition should be denied.

CONCLUSION

For the foregoing reasons, the petition for a writ

of certiorari should be denied.

Respectfully submitted,

MATTHEW W. LAMPE

Counsel of Record

JONES DAY

222 East 41st Street

New York, NY 10017

(212) 326-3939

mwlampe@jonesday.com

IK}. MICHAEL ROSSMAN

ERIC EK. MURPHY

JONES DAY

325 John H. McConnell

Bivd., Suite 600

P.O. Box 165017

Columbus, OH 43216

(614) 469-3939

Counsel for Respondent

AstraZeneca LP

August 26, 2010