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Downes v. J.P. Morgan Chase & Co.

May 16, 2007


The opinion of the court was delivered by: Gerard E. Lynch, District Judge


Plaintiff Sue Downes, a purported former employee of defendant JP Morgan Chase & Co. ("Chase"), brought this action alleging improper denial of certain employee benefits under ERISA, violation of the Equal Pay Act ("EPA" or "Act"), and various causes of action under state law. On May 8, 2006, this Court adopted the thorough and closely-reasoned Report and Recommendation ("R&R") of the Honorable Michael H. Dolinger, United States Magistrate Judge, granting summary judgment for Chase on all of plaintiff's claims except her Equal Pay Act claim. Downes v. JP Morgan Chase & Co., No. 03 Civ. 8991, 2006 WL 1233939 (S.D.N.Y. May 8, 2006), adopting R&R, 2006 WL 785278 (S.D.N.Y. March 21, 2006).

In denying Chase's motion for summary judgment on the EPA claim, the Court agreed with the Magistrate Judge that "whether defendants ultimately were aware of and had control of the wages of Downes and her alleged male comparators, whether those comparators were similarly-situated to Downes, whether their work was substantially equal to hers, and whether Downes and the comparators were employees of Chase, are quintessential fact questions" requiring trial. 2006 WL 1233939 at *2. The Court noted, however, that in its objections to the R&R, Chase had argued for the first time that Downes was not covered by the EPA at all, because she was a computer professional exempted by 29 U.S.C. § 213(a)(17) from coverage under the Act. Since this argument had not been previously presented by defendants or considered by the Magistrate Judge, the Court found it no obstacle to adopting the Magistrate Judge's recommendations on the issues that had been so presented and considered, and deferred further consideration of the argument. Id.

At a subsequent conference, the Court authorized supplemental briefing on the exemption issue, which has now been completed. Having fully considered the questions raised by that briefing, the Court concludes that Chase is correct that computer professionals as defined in § 213(a)(17) are outside the protection of the EPA. However, because the record leaves genuine issues of material fact with respect to whether Downes falls within that definition, defendants' motion for summary judgment will be denied.


The factual contentions of the parties and the legal standards relevant to Downes's various claims are fully set forth in the prior opinions of the Court and will not be repeated here.*fn1

For present purposes it is enough to note that plaintiff Downes undisputedly worked as a "technology manager and leader of the Hardware Standards Group within [Chase's] Enterprise Technology Services Group" (Downes July 2006 Aff. ¶ 9), during the period relevant to her claims. Additional background regarding her work duties will be described later in this opinion. Downes was terminated in May 2003 and later that same year commenced this lawsuit. Chase contends that Downes is a computer professional exempt from the EPA; Downes opposes that contention on procedural and substantive grounds, arguing that allowance of the undisputedly belated defense would unduly prejudice her, that the computer professional exemption does not apply to the EPA at all, and that, even if it does, triable issues of fact remain as to whether she falls within that exemption.


I. Waiver

In raising its claim of exemption, Chase effectively seeks leave to amend its answer pursuant to Fed. R. Civ. P. 15(a) to include the defense that plaintiff is exempted from coverage by the relevant statutory provision. See Magana v. Comm. of the Northern Mariana Islands, 107 F.3d 1436, 1445-46 (9th Cir. 1997) (claim of Fair Labor Standards Act exemption is an affirmative defense that must be specifically pleaded under Fed. R. Civ. P. 8(c) or be considered waived). Downes argues that Chase should be denied leave and instead be deemed to have waived the exemption defense, because otherwise she will "suffer prejudice." (P. Supp. Mem. at 21.) While undue prejudice is a reason to deny leave to amend an answer, Downes has not met her burden of demonstrating the risk of such prejudice here.

Leave to amend a pleading "shall be freely given when justice so requires." Fed. R. Civ. P. 15(a). This mandate of the Federal Rules of Civil Procedure has been interpreted as "reject[ing] the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept[ing] the principle that the purpose of pleading is to facilitate a proper decision on the merits." Foman v. Davis, 371 U.S. 178, 181-82 (1962). The decision whether to permit amendment lies within the discretion of the district court, but refusal "without any justifying reason" constitutes an abuse of that discretion. Id. at 182. In the Second Circuit, reason to refuse is found in "a showing by the non-movant of prejudice or bad faith," in the absence of which amendment should be permitted. Block v. First Blood Associates, 988 F. 2d 344, 350 (2d Cir. 1993). As relevant here, prejudice may be found in circumstances that "require the opponent to expend significant additional resources to conduct discovery and prepare for trial [or] significantly delay the resolution of the dispute." Id.

Downes concedes that she "cannot establish bad faith" (P. Supp. Mem. 21), but insists that Chase's delay has caused her prejudice. She claims that "the record is totally devoid of any discovery concerning" her statutory coverage and -- although this argument is not explicitly made -- that she would be driven to added expense in taking further discovery, assuming it were permitted. (Id. at 21-22.) "Even if plaintiff was allowed this discovery at this late juncture," Downes complains, "it would certainly delay the resolution of this case . . . , and it would be largely futile because [Chase's] witnesses would be fully programmed to respond." (Id. at 22.)*fn2

These arguments are unavailing. The record is hardly devoid of discovery concerning plaintiff's coverage. As will be discussed below with respect to the merits of the exemption argument, the relevant question of coverage amounts to a question about the duties plaintiff performed at work. See 29 U.S.C. § 213(a)(17); 29 C.F.R. § 541.103 (2003). Downes requires no discovery to describe her own work history. Indeed, the record is replete with relevant factual submissions, including four affidavits of plaintiff, her deposition testimony, and numerous supporting documents. To the extent that submissions predating defendants' raising of the exemption argument may have been incomplete, plaintiff has had the opportunity, and exercised it, to submit a further affidavit. (See Downes July 2006 Aff.) Moreover, Chase's argument relies entirely on Downes's own deposition testimony, and is not based on any evidentiary submissions of its own that Downes could test by further discovery. Downes thus provides no persuasive reason to think that more discovery is required.

Further, the delay resulting from allowance of this additional defense is hardly remarkable, let alone "significant[]." Block, 988 F.2d at 350. While Chase certainly could and should have raised its exemption defense earlier, briefing on the issue was ordered shortly after the initial summary judgment motion was resolved, which motion plaintiff sensibly does not claim caused any undue delay. The Court's opinion adopting the R&R to resolve that first summary judgment motion provided plaintiff ample notice, in the interim before briefing was ordered, that the exemption issue was in play. An extension of the exemption-defense briefing schedule was granted on a joint request submitted by plaintiff's counsel, and the issue was fully briefed as of August 11, 2006. The few months' delay in resolution of this case that can fairly be attributed to defendants' tardiness is hardly unusual, even if undesirable, and by itself is no reason to disallow the exemption defense.

Finally, a finding of waiver would be particularly inappropriate here. Chase does not seek belatedly to assert a technical, non-merits defense such as the statute of limitations. Rather, it argues that the law on which plaintiff relies simply does not apply to her. In effect, plaintiff's waiver argument amounts to the claim that, even if no law prohibits defendants' conduct or provides her the remedy she seeks, she should be awarded damages because the defendants did not notice sooner that their conduct was entirely legal. A rule that permits amendment whenever "justice so requires" would be bent beyond recognition by such a result.

II. Exemption from Equal Pay Coverage

Chase argues that Downes may not pursue claims under the Equal Pay Act, which is codified within the minimum wage section of the Fair Labor Standards Act ("FLSA"),*fn3 because the record indisputably shows her to fall within a category of employees, certain skilled computer workers, specifically excluded from FLSA coverage. See 29 U.S.C. § 213(a)(17). Downes counters, first, that, even if she clearly falls within that category, her claim must still survive, because to read the FLSA as excluding skilled computer workers from equal pay coverage would contravene the very purpose of the EPA. Alternatively, she argues that the existing record does not establish her classification within that exemption category beyond a triable dispute.*fn4 The Court declines plaintiff's invitation to interpret the FLSA contrary to its plain meaning, but concludes that genuine issues of material fact exist as to whether Downes's "primary duty" falls within the skilled computer worker exemption.

A. Equal Pay Exemption under § 213(a)(17)

The EPA constitutes a subsection of FLSA's minimum wage section, 29 U.S.C. § 206. The disputed exemption states that "[t]he provisions of section 206 . . . shall not apply with respect to . . . any employee" whose primary duty is to perform certain computer-related work for a certain level of pay. 29 U.S.C. § 213(a)(17). Downes does not, as she reasonably could not, suggest that the statutory text denying equal pay coverage to workers categorized within § 213(a)(17) is at all ambiguous; computer workers falling within the category defined in § 213(a)(17) are by the express terms of the statute not covered by any of the provisions of § 206, including the EPA. Rather, she argues that any such denial "simply flies in the face of the remedial, equitable and humanitarian purposes of the [EPA]." (P. Supp. Mem. 11.) She urges that Congress, given the history of the EPA's passage, could not have intended by § 213(a)(17) -- or any occupation-based exemption category, by her logic -- to exclude the encompassed employees from equal pay protection: "There is no basis for any exemption of EPA coverage based on [Downes's] profession, since the EPA was clearly enacted to remedy wage differentials between men and women that have no legitimate explanation other than sex discrimination." (Id.) Plaintiff's argument may well be persuasive as a matter of policy or moral imperative. Nevertheless, the actual history of the relevant legislation depicts a legislative reality that falls short of her proposed ideal.

Congress passed the EPA "[t]o prohibit discrimination on account of sex in the payment of wages." Equal Pay Act of 1963, Pub. L. No. 88-38, 77 Stat. 56, Preamble. It found among other problems that "wage differentials based on sex" depressed wages and living standards for workers, caused labor strife, and enabled unfair competition among employers. Id., Declaration of Purpose, § 2(a); see also Corning Glass Works v. Brennan, 417 U.S. 188, 206 (1974). During debate preceding passage, legislators discussed gender discrimination in pay as not merely a pragmatic but also a moral issue: "[T]he bill pending . . . is an act of economic justice which would advance our civilization by translating into action another aspect of our national ideals concerning equal rights and equal opportunities for women," noted one senator. 109 Cong. Rec. 8913, 8915 (1963) (statement of Sen. Randolph), reprinted in Comm. on Educ. and Labor, 88th Cong., Legislative History of the Equal Pay Act of 1963, at 53 (1963) (as prepared by the Office of Solicitor of the U.S. Department of Labor). Rep. Adam Clayton Powell, Jr., chair of the House committee that championed enactment of the EPA, declared, "The fact that employers still pay lower wage rates to women workers for the same or comparable work as that performed by men workers in the same place is contrary to every concept of equality and justice in which we ...

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