HARRIS v.INVESTOR'S BUSINESS DAILY, INC

Filed 3/29/06

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

APPEAL from a judgment of the Superior Court of Los Angeles County,

Rodney E. Nelson, Judge. Reversed and remanded.

Thierman Law Firm, Mark R. Thierman; Law Offices of Eric M. Epstein, Eric M. Epstein; Hoffman & Lazear, H. Tim Hoffman and Arthur Lazear for Plaintiff and Appellant.

Law Office of Marjorie G. Fuller, Marjorie G. Fuller, Vicki Marolt Buchanan; Silver & Freedman, Belle C. Mason and Stephen M. Bernardo for Defendant and Respondent.

In this wage-and-hour class action lawsuit, telemarketers who sold newspaper subscriptions alleged violations of federal and state labor laws. The principal issues on appeal are: (1) whether a federal Fair Labor Standards Act[1] (FLSA) claim may serve as the predicate act for a California Business and Professions Code section 17200 (section 17200) cause of action; (2) whether the employees qualified for the commission exemption from California overtime laws; and (3) whether the employer lawfully deducted points employees had earned from a sale if the customer later cancelled the subscription. Finding the FLSA does not preempt the section 17200 claim, we conclude the trial court improperly sustained the demurrer to that cause of action. We find triable issues of material fact exist as to the remaining claims and reverse the judgment as to those causes of action.

FACTUAL AND PROCEDURAL SUMMARY

Appellants Toby Harris, Kevin O'Connor, Michael Sandercock, Alex Lane, and Michael Bey were employed as telemarketers to sell subscriptions to a financial newspaper, Investor's Business Daily, Inc. (IBD). IBD sold subscriptions through Direct Marketing Specialists, Inc. (DMSI).

Appellants were compensated on the basis of a point system which rewarded them for selling longer subscriptions, winning daily contests, and meeting weekly sales goals. Appellants were subject to a â€