UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE AT NASHVILLE DAVID HELDMAN, ) ) Plaintiff, ) Civil No. ) v. ) ) KING PHARMACEUTICALS, INC., ) ) Defendant. ) COLLECTIVE ACTION COMPLAINT FOR VIOLATIONS OF THE FAIR LABOR STANDARDS ACT Plaintiff, David Heldman, is a former Pharmaceutical Representative in Hospital Sales of Defendant King Pharmaceuticals, Inc. ( King or Defendant ). Plaintiff, individually and on behalf of all other similarly situated King Pharmaceuticals, Inc. Pharmaceutical Representatives (defined in Paragraph 3, below), complains by his undersigned attorneys as follows: NATURE OF THE ACTION 1. Plaintiff sues on behalf of himself and other similarly situated Pharmaceutical Representatives ( PRs ) who work or have worked for the Defendant and who elect to opt into this action (the Class ) pursuant to the Fair Labor Standards Act ( FLSA ), 29 U.S.C. 201et seq., and specifically the collective action provision of FLSA 29 U.S.C. 216(b). This action claims that King violated the wage-and-hour provisions of the FLSA by depriving the Plaintiff, and other similarly situated to the named Plaintiff, of their lawful overtime wages. 2. On October 14, 2009, the U.S. Department of Labor filed an amicus brief in the In Re Novartis Wage and Hour Litigation, No. 09-0437 in the Federal Court of Appeals for the 1 Case 3:10-cv-01001 Document 1 Filed 10/22/10 Page 1 of 11 PageID #: 1
Second Circuit, concluding that pharmaceutical drug representatives such as the Plaintiff and the Class do not qualify as exempt from overtime under the outside sales or administrative exemptions of the FLSA because they neither make sales nor exercise sufficient discretion in executing their job duties. 3. Plaintiff alleges on behalf of himself and the Class that Plaintiff and Class members regularly worked overtime hours, as defined by the FLSA, and are entitled to overtime compensation for those hours. For at least three years prior to the filing of this complaint, Defendant King has committed widespread violations of the FLSA by, among other violations, misclassifying Plaintiff and the Class as employees exempt from overtime pay. In truth, Plaintiff and other King employees who are in positions including, but not limited to, Professional Pharmaceuticals Sales Representatives, Professional Sales Associate, Medical Sales Representatives, Pain Sales Specialists, Pain Specialty Sales Representatives, Primary Care Sales, Hospital Sales Specialists, and Specialty Sales Representatives, and employees who performed substantially the same work as employees with those titles who market King s branded prescription pharmaceutical products (generally referred to as a Pharmaceutical Representative or PR ), are not exempt from the wage and hour laws. Accordingly, Defendant King is liable for failing to pay Plaintiff and the Class for overtime hours worked in excess of forty (40) hours per week at a rate of one-and-one-half times their regular rate of pay. 4. Plaintiff and the Class seek unpaid compensation, an equal amount of liquidated damages and prejudgment interest, attorneys fees, and cost pursuant to 29 U.S.C. 216(b). JURISDICTION AND VENUE 5. This Court has subject matter jurisdiction pursuant to 28 U.S.C. 1331 because this case is brought under the Fair Labor Standards Act, 29 U.S.C. 201, et. seq. 2 Case 3:10-cv-01001 Document 1 Filed 10/22/10 Page 2 of 11 PageID #: 2
6. Venue is proper in the Middle District of Tennessee pursuant to 28 U.S.C. 1391(b) and 28 U.S.C. 1391(c) because Defendant does business in this district, employs PRs and other employees living and working in this district, and, as detailed below, a substantial part of the events or omissions giving rise to the Plaintiff s claims occurred in this district. THE PARTIES A. The Representative Plaintiff 7. David Heldman ( Plaintiff ) is a citizen of Tennessee, resides in Franklin, Tennessee, and was employed by Defendant as a PR working in Hospital Sales from October 2006 until May 2010. Plaintiff performed his job duties within his assigned region, which included all or most of the Middle District of Tennessee. Plaintiff routinely worked hours in excess of forty (40) hours per work week, without receiving overtime compensation as required by federal law. B. The Defendant 8. King Pharmaceuticals, Inc. is a Tennessee corporation with principal offices located at 501 Fifth Street, Bristol, Tennessee 37620. King is a vertically integrated branded pharmaceutical company that performs basic research and develops, manufactures, markets and sells branded prescription pharmaceutical products and animal health products. King employs PRs nationwide who market its branded prescription pharmaceutical products to general/family practitioners, internal medicine physicians, neurologists, pain specialists, surgeons, and hospitals. Moreover, all United States company-wide marketing materials, communications, and training videos are disseminated to PRs from King. Plaintiff and the Class also receive their paychecks from King s headquarters in Bristol, Tennessee. 3 Case 3:10-cv-01001 Document 1 Filed 10/22/10 Page 3 of 11 PageID #: 3
9. At all relevant times, King was and is legally responsible for all of the unlawful conduct, policies, practices, acts and omissions as described in each and all of the foregoing paragraphs as the employer of Plaintiff and Class Members. 10. At all times material to this action, Defendant was the employer of Plaintiff within the meaning of 29 U.S.C. 203(d). At all times material to this action, Plaintiff was an employee of Defendant as defined by 203(e)(1) of the FLSA, and worked for Defendant within the territory of the United States within three (3) years preceding the filing of this lawsuit. 11. At all times material to this action, Defendant was an enterprise engaged in commerce or in the production of goods for commerce as defined by 203(s)(1) of the FLSA. 12. At all relevant times, the unlawful conduct against Plaintiff and Class Members as alleged herein was actuated, in whole or in part, by a purpose to serve King. At all relevant times, upon information and belief, the unlawful conduct alleged herein was reasonably foreseeable by King and committed under actual or apparent authority granted by King such that all of the alleged unlawful conduct is legally attributable to King. 13. The overtime wage provisions set forth in 206 and 207 of the FLSA apply to King. Defendant s PR jobs are not positions involving work that falls within any exception or exemption to 29 U.S.C. 213(a)(1). COLLECTIVE ACTION ALLEGATIONS UNDER THE FLSA 14. Plaintiff worked for King as a PR from October 2006 until May 2010. 15. Plaintiff s primary responsibility in his position at King is to call on practicing physicians and hospitals in order to provide them with information pertaining to King products. 4 Case 3:10-cv-01001 Document 1 Filed 10/22/10 Page 4 of 11 PageID #: 4
16. Plaintiff brings his FLSA claim on behalf of all persons who worked for Defendant as PRs at any time from three years prior to the filing of this Complaint to entry of judgment in this case. 17. Defendant treated Plaintiff, and upon information and belief, all other similarly situated PRs, as exempt, under 213(a) of the FLSA, from the statute s overtime pay requirements. 18. Defendant failed to pay Plaintiff, and upon information and belief, other members of the class, for hours worked over forty per week at a rate of one-an-one-half time their regular rate of pay. A. Plaintiff and Class Members Primary Job Duties 19. King controlled and directed every significant facet of Plaintiff and its other PRs daily job activities as follows: King establishes and provides its PRs with target account lists and a promotional budget based on pre-formulated Company-wide and District-level business plans. These accounts include influential members of a given healthcare institution, such physicians, hospital pharmacy pain and therapeutics committee, nurses, department heads, residents, and staff. King establishes call routing plans for PRs that maximize account contact time, while reducing travel time. King develops both the oral and written communications that PRs disseminate to doctors, hospitals, and others. King trains Plaintiff and Class members to give a scripted presentation about the pharmaceuticals that they promote, and King requires that PRs stick to the script when discussing King s products. Plaintiff cannot convey any written materials to physicians 5 Case 3:10-cv-01001 Document 1 Filed 10/22/10 Page 5 of 11 PageID #: 5
other than what King gives them. King supplies PRs with manuals, textbooks, marketing materials and other assigned equipment to be used for messaging and sample accountability. King also notifies PRs when there are product updates and gives them detailed instructions where and how to obtain updated promotional materials. King requires that PRs closely document their activities and submit regular reports. All United States King PRs must attend a multi-week training program at King s training facility in Bridgewater, New Jersey, and pass oral and written tests prior to beginning their jobs. 20. King closely supervised Plaintiff and other PRs through a network of District Managers throughout the United States. The District Manager is accountable for managing the activities of an assigned group of sales representatives within a geographic area, or District, to deliver assigned sales goals and related objectives from the strategic sales plan. District Managers help establish the Class members schedules, closely monitor their progress on that schedule, and allocates and tracks return on a marketing budget. District Managers hold PRs accountable through regular conference calls and field coaching sessions with each PR. Managers regularly accompany PRs on visits to physicians to ensure Class members do not deviate from Defendant s script that originates from headquarters. Class Members are not permitted to respond to physicians medical questions about the pharmaceuticals. Deviation from these established policies can result in discipline up to and including termination. 21. Plaintiff and Class members working as PRs had no authority to formulate, affect, interpret, or implement King s management policies or its operating practices. They are not involved in planning King s long-term or short-term business objectives, and do not carry out 6 Case 3:10-cv-01001 Document 1 Filed 10/22/10 Page 6 of 11 PageID #: 6
major assignments in conducting the operations of King s business. Class members have no authority to commit King in matters that have significant financial impact. 22. Although King refers to them as sales personnel, Plaintiff and Class members do not sell any of King s drug products or obtain any orders for King s drug products. As alleged above, Plaintiff s primary duty is promotional work directed at key hospital personnel within the institution (physicians, hospital pharmacy pain and therapeutics committee, nurses, department heads, residents, and staff). However, Plaintiff and Class members do not obtain any legally binding commitment from these individuals to prescribe King s drug products. Neither do PRs recommend particular levels or volume of drug purchases. Furthermore, Plaintiff and Class do not obtain legally binding commitment from the wholesalers, pharmacies, or patients who actually purchase King s products. At most, Plaintiff and Class obtain non-binding commitments from physicians to prescribe King s products for their patients when appropriate. Significantly, even though Plaintiff and the Class visit doctors and promote pharmaceuticals, federal regulations actually prevent them from selling pharmaceuticals. 23. Plaintiff and other PRs received bonuses based on certain usage metrics, e.g. whether or not certain sales quotas for the District, Region, and Company are achieved as measured by IMS/NDC Health Source data. However, these compensation amounts allocated to Plaintiff and Class members cannot be properly classified as sales commissions because they are calculated pursuant to a defective company-wide formula that yields an arbitrary amount which is in no way reflects the PRs effectiveness in promoting the use of certain King products. B. Primary Job Duties Of Plaintiff and Class Required Them To Work Overtime 24. Plaintiff and Class members consistently worked more than forty (40) hours per week. King encouraged and often required that Plaintiff and other PRs work during and beyond 7 Case 3:10-cv-01001 Document 1 Filed 10/22/10 Page 7 of 11 PageID #: 7
normal business hours in a given week. For example, King requires that PRs in Hospital Sales present lunch and evening speaker programs intended to educate hospital personnel about King s products. Additionally, PRs are encouraged to visit hospital departments which frequently begin operating in the early morning hours, to make themselves available to respond to inquiries any time of the day, and to guarantee accounts that the PRs will respond within a 24-hour period. Plaintiff and Class members are also expected to spend multiple weekly lunches with physicians. 25. In addition to reporting to physicians offices and hospitals, Plaintiff and other PRs were required to: perform daily administrative computer work before 9:00 a.m. and after 5:00 p.m., and on some weekends; attend multiple Saturday day-long symposiums; conduct at least a certain number of evening speaker programs; attend company-mandated dinners after regional and annual meetings; view company-mandated training videos; participate in online training and tests; and call in to several company-wide conference calls per month. 26. Company-mandated syncing of Plaintiff s and other PRs computers was conducted daily to track his travel, log his activities in the field, and record data maintained on his computer such as his email, travel log, call logs, and product sample logs. The syncing also supplied the Plaintiff with specific instructions regarding his future activities in the field and information he would need to communicate to accounts regarding King s products. 27. King also expressly required that Plaintiff and the Class travel within their given geographic region to visit doctors and hospital contacts, and provides a company car for this purpose. King also provides PRs with physician and hospital contact lists, call records, company credit cards, and PDAs or cell phones so that they can be reached 24 hours a day, 7 days a week by both the Company and their accounts. 8 Case 3:10-cv-01001 Document 1 Filed 10/22/10 Page 8 of 11 PageID #: 8
28. Defendant King has intentionally and repeatedly engaged in a practice of improperly misclassifying non-exempt PRs as salaried exempt employees. 29. Plaintiff and all other similarly situated employees do not qualify as exempt employees, as defined by the applicable Federal regulations. 30. Defendant is liable under the FLSA for failing to properly compensate Plaintiff, and as such, notice should be sent to past and present PRs. There are numerous similarly situated current and former PRs of King who have been misclassified in violation of the FLSA and who would benefit from the issuance of a court supervised notice of the present lawsuit and the opportunity to join in the present lawsuit. Those similarly situated employees are known to Defendant, are readily identifiable, and can be located through Defendant s records. 31. Plaintiff and Class members are similarly situated, have substantially similar job requirements and pay provisions, and are subject to King s common practices which violate FLSA labor statutes. CLAIM FOR RELEASE (FLSA) 32. Plaintiff alleges and incorporates by reference the preceding paragraphs of this complaint as if fully alleged herein. Plaintiff refers to David Heldman, and any Class members who file individual consents to sue in this action. 33. Because Defendant-King willfully violated the FLSA by misclassifying Plaintiff and Class members as exempt employees, a three-year statute of limitations applies to such violations, pursuant to 29 U.S.C. 255. 34. King has willfully and intentionally engaged in a widespread pattern and practice of violating the provisions of the FLSA, as detailed herein, by misclassifying PRs as exempt employees, thereby failing and refusing to pay the proper hourly wage compensation of current 9 Case 3:10-cv-01001 Document 1 Filed 10/22/10 Page 9 of 11 PageID #: 9
and former PRs, including Plaintiff, and all others similarly situated, in accordance with 206 and 207 of the FLSA. 35. As a result of Defendant s FLSA violations, Plaintiff, as well as all others similarly situated, have suffered damages by being denied overtime wages in accordance with 206 and 207 of the FLSA. 36. Defendant has not made a good faith effort to comply with the FLSA with respect to its compensation of Plaintiff and other similarly situated present and former PRs. 37. Because of Defendant s unlawful acts, Plaintiff and all similarly situated current and former PRs have been deprived of overtime compensation in amounts to be determined at trial, and are entitled to recovery of such amounts, liquidated damages, prejudgment interest, attorneys fees, costs, and other compensation pursuant to 29 U.S.C. 216(b). PRAYER FOR RELIEF WHEREFORE, the named Plaintiff, individually and on behalf of all other similarly situated persons, prays for the following relief: A. a declaratory judgment that the practices complained of herein are unlawful under FLSA; B. certification of this action as a collective action brought pursuant to the FLSA 216(b); C. at the earliest possible time, the Plaintiff be allowed to give notice of this collective action, or that the court issue such notice, to all persons who are presently, or have been at any time during the three years immediately preceding the filing of this suit, up through and including the date of this Court s issuance of Court-supervised Notice, been employed by the Defendant King as a PR. Such persons shall be informed that this civil action has been filed, of 10 Case 3:10-cv-01001 Document 1 Filed 10/22/10 Page 10 of 11 PageID #: 10
the nature of the action, and of their right to join this lawsuit if they believe they were misclassified as an exempt employee, whereas their primary or significant work duties entail duties commonly performed by non-exempt, hourly employees. D. an award of damages, according to proof, including unpaid wages and liquidated damages pursuant to 29 U.S.C. 201 et seq. and the supporting United States Department of Labor regulations; E. penalties available under applicable law; F. pre- and post-judgment interest, as provided by law; G. attorneys fees and costs; and H. such other relief as this Court shall deem just and proper. Dated: October 22, 2010 Respectfully Submitted, /s/ Joe P. Leniski, Jr. Joe P. Leniski, Jr. (#22891) James G. Stranch, III (#2542) J. Gerard Stranch, IV (#23045) BRANSTETTER, STRANCH & JENNINGS, PLLC 227 Second Avenue North, 4 th Floor Nashville, Tennessee 37201-1631 Telephone: (615) 254-8801 Facsimile: (615) 255-5419 Email: jleniski@branstetterlaw.com Attorneys for Plaintiff David Heldman 11 Case 3:10-cv-01001 Document 1 Filed 10/22/10 Page 11 of 11 PageID #: 11