PHARBLOGIMAGE.JPGCo-authored by Jessica Schauer and Richard Alfred

The past two weeks have brought a number of important updates for those watching the Christopher v. SmithKline case, in which the Supreme Court will determine whether pharmaceutical sales representatives are properly classified as exempt from overtime as outside salespersons under the Fair Labor Standards Act (“FLSA”) and whether to defer to the Department of Labor’s (“DOL”) position expressed in amicus briefs that they are not.

First, the plaintiffs filed their merits brief with the Supreme Court a week ago on January 30.  As expected, they argue that pharmaceutical sales representatives “do not sell drugs, they promote them” because they are prohibited by law from selling prescription products directly to physicians or patients.  They also argue that DOL’s interpretation of the outside sales regulations, as described in the DOL’s lower court amicus briefs, is entitled to judicial deference.  According to the plaintiffs, the DOL’s outside sales regulations “elaborate substantially on the statute” and the agency’s amicus briefs provide “at the very least a permissible reading” of those regulations.

Second, the DOL filed an amicus brief in support of the plaintiffs this week.  While there are few surprises in the DOL’s arguments with respect to the outside sales exemption, which closely mirror the agency’s submissions in other pharma cases, the latest brief addresses the level of deference to be afforded to the DOL’s position through an argument that has obvious flaws.  The brief says relatively little about Auer deference, the type of deference applied by the Second Circuit in In re Novartis.  Instead, the brief spends more than 10 pages arguing that the agency’s reasoning is valid and not inconsistent with its prior guidance – factors most pertinent to the lesser level of Skidmore deference.  The DOL argues strenuously that its view on the definition of “sales” has not changed over time, but in doing so, it conflates two issues:  the definition of “sales” (whether a transfer of title is required under the statute) and the distinction between making sales and promoting sales.  The brief cites examples where the DOL has rejected suggestions that “promotional work” should be considered exempt work, but the DOL never makes clear whether in those instances the DOL was concerned that no sale had taken place or merely objected to the proposition that there need not be a direct tie between employee’s efforts and particular sales targets.  SmithKline will likely address the DOL’s deference arguments in its brief, due March 19th. 

Finally, last Friday the Supreme Court scheduled oral argument for Monday, April 16, 2012.  We plan to have members of Seyfarth Shaw’s Wage & Hour Litigation Practice Group in attendance for the argument and will report on it immediately afterwards.  Given this schedule, we do not expect a decision until late June.