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Levy v. Verizon Information Services Inc.

July 25, 2007

SABRINA LEVY, JOSEPH BAILEY, BONNIE PHILLIPS, VALERIE MACHEMER, JOHN KUPER, AND CHARLES ROSSI, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
VERIZON INFORMATION SERVICES INC., A DIVISION OF VERIZON COMMUNICATIONS INC., VERIZON DIRECTORIES, CORP., VERIZON ACCOUNTING AND INFORMATION SERVICES, INC., AND VERIZON NEW YORK DIRECTORY SALES COMPANY, DEFENDANTS.
JOSEPH PASQUALI, EVE WEGENER, EDWARD SMITH AND KIM COSSART, ON BEHALF OF THEMSELVES AND ALL OTHER SIMILARLY SITUATED AND AS CLASS REPRESENTATIVES, PLAINTIFFS,
v.
VERIZON INFORMATION SERVICES, INC., VERIZON DIRECTORIES, CORP., VERIZON ACCOUNTING AND INFORMATION SERVICES, INC., AND VERIZON NEW YORK DIRECTORY SALES COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Gershon, United States District Judge

OPINION AND ORDER

Plaintiffs Sabrina Levy, Joseph Bailey, Bonnie Phillips, Valerie Machemer, John Kuper, Charles Rossi, Joseph Pasquali, Eve Wegener, Edward Smith, and Kim Cossart (collectively, "the Named Plaintiffs") bring this consolidated class action against defendants Verizon Information Services, Inc., Verizon Directories, Corp., Verizon Accounting and Information Services, Inc., and Verizon New York Directory Sales Company (collectively, "Verizon" or "the Company") for (1) unlawful wage deductions under state law and (2) failure to make required overtime payments under federal and state law. Verizon now seeks dismissal of plaintiffs' unlawful wage deduction claims. For the reasons set forth below, Verizon's motion is granted.

FACTS

The following facts are either alleged in the complaint or, as described below, properly viewed as incorporated into the complaint.

The Parties

Defendant Verizon Information Services, Inc. publishes, among other things, Yellow Page print directories, and it controls the internet search portal SuperPages.com. At all relevant times, Verizon employed the Named Plaintiffs and the alleged class members. As Verizon sales representatives, plaintiffs sell advertising in the Yellow Pages and on SuperPages.com.*fn1 Some of the plaintiffs are Telephone Sales Representatives ("TSRs"), who work inside Verizon's offices and contact subscribers and potential customers by telephone. Others are Premise Sales Representatives ("PSRs"), who travel outside Verizon's offices to customer locations to make sales in person. The Named Plaintiffs work out of Verizon's offices in Albany, New York; Buffalo, New York; Somerset, New Jersey; and Bethlehem, Pennsylvania.

According to the First Amended/Consolidated Class Action Complaint (the "complaint"), plaintiffs work under written compensation plans, described in more detail below, which provide a modest base wage and commissions (or "incentive compensation"), which Verizon projected would roughly equal but could far exceed the base wage. These incentive wages, which are based on an individual's personal success and productivity in selling Yellow Pages or other Verizon advertising, comprise a substantial and integral component of the overall compensation of plaintiffs.

Plaintiffs are all represented by the Communication Workers of America, AFL-CIO ("CWA" or the "Union"). Since early 2002, Verizon has recognized the CWA as the sole and exclusive bargaining agent of the Company's sales representatives in its Northeast and Middle Atlantic Regions. Accordingly, the CWA represents plaintiffs for the purpose of collective bargaining with respect to rates of pay, wages, hours, and other conditions of employment. Verizon's sales workforce in New York and the Mid-Atlantic region through Virginia (the "Region") is organized into separate bargaining units, each unit representing a different geographic area in which the Company has offices. Verizon therefore operates under separate collective bargaining agreements (collectively, "CBAs") that it has entered into with the CWA in the Region. The effective date of each CBA is February 9, 2003.*fn2 The CBAs that cover the plaintiffs are identical in all material respects.

Article 9 of the CBAs and the Related Compensation Plans

Article 9 of each CBA includes a provision that governs the plaintiffs' sales compensation. Specifically, Article 9 references Verizon's Modified Sales Compensation Plan (the "MSCP") as follows:

VIS's Modified Sales Compensation Plan (MSCP), which includes Base Pay Ranges, will apply to sales representatives in each job title. The MSCP will be implemented in conjunction with VIS sales policies as adjusted periodically. Base pay administration will be in accordance with the Company's Merit Pay Plan. 2003 CBA, Art. 9, § 9.1.

The MSCP in effect at the time this lawsuit was filed is commonly referred to as the Encompass Incentive Compensation Plan (the "Encompass Plan"), which went into effect in July 2003. The Encompass Plan superseded the prior incentive compensation plan, which is commonly referred to as the SalesPay Plan.*fn3 As summarized below, the Plans set forth the conditions under which incentive compensation is earned and paid. For example, the Encompass Plan defines when incentive compensation is earned and distinguishes earned incentive compensation from incentive compensation advances:

Advances versus Earned Incentive Compensation: Incentive compensation is not "earned" until the sale is Final, and a sale is not deemed Final for incentive compensation purposes unless and until the customer advertising is accepted and published in accordance with the terms and conditions of the customer's contract with [the Company]. Thus, for example, when customer advertising is cancelled and removed from publishing and billing, no incentive compensation is earned. Nevertheless, [the Company] will advance to Plan Participants incentive compensation based upon preliminary sales results. All incentive compensation that is advanced is subject to true-up and true-down and reconciliation with earned incentive compensation (once sales become final) and thus, incentive compensation that is advanced and that is greater than what the Plan Participant actually earned will be recovered by [the Company] from the Plan Participant (either from future incentive compensation or otherwise).

Encompass Plan, Policies and Procedures, § C.7.

The Encompass Plan also sets forth how sales incentive compensation is calculated and how the Company can make adjustments to incentive compensation advances based on post-sale activity:

Incentive Advance Payment and Recovery: [The Company] calculates sales incentive compensation advances based on a typical customer commitment of twelve (12) months for each contract of sale made by the customer through a [Company] sales representative. Therefore, sales incentive rates are based on twelve-month value. Sales incentive compensation advances are subject to adjustments based on post sale order adjustment activity.

Encompass Plan, Policies and Procedures, § C.8.

The Encompass Plan also addresses how incentive compensation overpayments are to be treated:

Overpayment: In the event that an overpayment occurs, the amount owed the Company will be deducted from future sales incentive compensation payouts before the Company pays any further sales incentive compensation payouts. If necessary, this procedure will continue through the Plan year. At Plan year-end, if an overpayment situation occurs or still remains, the debt will continue to be retired by deducting from future sales incentive compensation payouts. If the debt is not retired by the end of the following Plan year, then the employee must retire the debt within thirty (30) calender days of notification by Sales Management.

Encompass Plan, Policies and Procedures, § C.16.

Finally, the Encompass Plan sets forth the factors to be considered in the quota/objective setting process:

Quotas and Targets: VIS Sales Management has the sole discretion to assign Quotas/Objectives as it deems fit. Factors to be considered in the quota/objective setting process may include, but are not limited to, the following:

* Introduction of new products and services

* Business potential in each account/territory

* Local and national economic trends

* Current Business Plan, including competitive analysis

* Account Plan

* Impact of planned sales promotion(s) and ...


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