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Henderson v. Transportation Group

July 1, 2010


The opinion of the court was delivered by: Denise Cote, District Judge


This litigation raises the question of whether financial analysts employed by a boutique investment bank are properly classified as exempt from the overtime compensation rules prescribed by the Fair Labor Standards Act, 29 U.S.C. §§ 201-219 ("FLSA"). Plaintiff Theodore Henderson ("Henderson") has moved for discovery of the names, addresses, and other identifying information of analysts and associates, authorization for notice of this collective action to be sent to those potential plaintiffs, and an order requiring the defendants to post notice of this action in a place where employees are likely to view it. Following targeted, partial discovery, defendants The Transportation Group, Ltd. ("TTG") and Joseph Steuert ("Steuert") have moved for summary judgment. The motion for summary judgment is denied and the request for authorization to send notice of the action is granted in part.


Henderson worked briefly at TTG as a financial analyst in the spring of 2009. He filed his complaint on August 20 on behalf of himself and all those similarly situated. An amended complaint was filed December 7. The amended complaint alleges wage and hour violations under the FLSA. It also seeks to maintain a class action pursuant to Fed. R. Civ. P. 23(b)(3) for violations of New York Labor Law, N.Y. Comp. Codes R. & Regs. ("NYCRR") tit. 12, § 142-2.2.

On December 10, in a conference with the Court, the parties agreed to engage in discovery regarding the applicability of the administrative exception under the FLSA, 29 U.S.C. § 213(a)(1), and New York Law, NYCRR tit. 12, § 142-2.14(c)(4),*fn1 specifically whether an analyst's duties at TTG include the exercise of discretion and independent judgment, see 29 C.F.R. § 541.200(a). On December 16, the parties agreed to respond to a limited number of interrogatories and document requests, and to conduct one deposition each. In February 2010, two individuals, James Pak ("Pak") and Han Eol Cho, each filed with the Court a "Consent to Join Collective Action." On March 1, defendants filed a motion for summary judgment. The same day, Henderson sought permission to send out Court-approved notice of a collective action. Both motions were fully submitted on April 12, 2010.


The following facts are undisputed, or, where disputed, are taken in the light most favorable to Henderson. TTG is a boutique investment bank that provides "investment offerings, investment research and arrangement and advisory services related to the aviation and rail transportation industries." In February 2009, approximately six financial analysts worked in TTG's New York office. TTG did not pay its financial analysts or associates overtime pay for hours worked in excess of forty per week.

A. TTG's Business

Each transaction in which TTG is involved is staffed by a team consisting of financial analysts, associates, and vice presidents; the teams complete assignments as a group. The analysts at TTG are divided into two teams that do essentially the same work, although one team focuses more on marketing, and the other more on pricing. The steps that TTG takes in connection with the deals it facilitates are: identifying companies that need to finance or refinance their equipment; making a proposal tailored to the needs of those companies; presenting the transaction to financing sources; when necessary, restructuring the proposed pricing to respond to investor needs; structuring a transaction and preparing the term sheets; and documenting and closing the transaction. In the course of carrying out their duties, each team member participates in activities such as conference calls with clients and internal strategy meetings.

B. The Role of Financial Analysts

Shortly after they are hired, financial analysts are trained by TTG in "financial concepts terminology" and the fundamental principles of accounting and corporate credit worthiness. Inexperienced analysts complete "homework" to practice these skills. TTG does not have written guidelines or manuals that dictate how to perform the job of analyst; analysts learn through doing small portions of real assignments.

The role of analysts is "to support" the efforts of the entire team to complete the transaction. All analysts perform the same types of duties, although those duties vary based on the individual analyst's experience. The duties include (1) making telephone calls and sending emails to prospective investors in order to market transactions, (2) assisting in the development of financial models using Microsoft Excel spreadsheets, and (3) developing term sheets to finalize a deal.

All members of the team, including associates and vice presidents, make the marketing telephone calls, the goal of which is to inform potential investors of the terms of commercial loans for aircraft. TTG provides its analysts with the terms of the loans that are being marketed and contact information for potential investors. In addition to telling potential investors the terms of the deal that TTG is marketing, the team members are "expected to synthesize the feedback heard from investors" in order to discuss trends or insights that could be addressed through changing the terms of the deal. Analysts are also expected to maintain relationships with investors to help in marketing current and future deals to them.*fn2

If investors inquire about other investment opportunities, the analysts are permitted to discuss alternative transactions if the analysts are aware of the terms of those other transactions. In some cases the marketing calls are preceded by a marketing email that outlines the terms of a proposed transaction. Analysts have some role in updating these emails with information relevant to the deal at issue or drafting portions of these emails.

With respect to lease pricing files, or models, an analyst is responsible for updating or working on portions of these Microsoft Excel spreadsheets based on his level of experience. Generally, the task involves "looking at a specific aircraft and trying to figure out a financing package, generating an appropriate model." A lease pricing file is a "sophisticated Excel spreadsheet consisting of workbooks that are linked together to provide a Summary Sheet that details the variables (input) that have been used to determined [sic] the proposed economics of the transaction." The parties dispute whether an understanding of finance is necessary to perform the calculations involved in creating the models, or if it involves merely "plugging in numbers" provided by management.

Finally, analysts play a role in preparing term sheets. The lenders, lessee, and equity investors all require a separate term sheet for each transaction. Analysts participate in telephone calls with these parties and then revise ...

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