Kraxberger v. SMB Team LLC

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
Civil No. 24-5900
MEMORANDUM
Costello, J. 	January 5, 2026
I. 	BACKGROUND
Plaintiff Michelle Kraxberger formerly worked for Defendant SMB Team, LLC as a
business coach and strategist primarily serving legal professionals and law firms. ECF No. 52 at
2 ¶ 1. Plaintiff brought this action to recover overtime wages she alleges Defendant owes her
under the Fair Labor Standards Act (“FLSA”) and the Pennsylvania Minimum Wage Act
(“PMWA”). Id. at 1.
Defendant’s position is that the overtime provisions of the FLSA do not apply to
Plaintiff, who falls under the Administrative Exemption to the statute’s overtime compensation
requirements. See ECF No. 36-1 at 1-2. The FLSA’s Administrative Exemption applies to
employees who are “(1) Compensated on a salary or fee basis at a rate of not less than [$455 per
week] . . . (2) Whose primary duty is the performance of office or non-manual work directly
related to the management or general business operations of the employer or the employer’s
customers; and (3) Whose primary duty includes the exercise of discretion and independent
judgment with respect to matters of significance.” 29 C.F.R. § 541.200(a) (2016).
MICHELLE KRAXBERGER,
Plaintiff,
v.
SMB TEAM, LLC,
Defendant.
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Both Plaintiff and Defendant moved for summary judgment on this issue. See ECF No.
33 (Plaintiff’s motion for summary judgment); ECF No. 36-1 (Defendant’s motion for summary
judgment). For the reasons that follow, the Court will deny both motions.
II. 	LEGAL STANDARD
Summary judgment is appropriate if the movant shows “that there is no genuine dispute
as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). “To defeat a motion for summary judgment, there must be a factual dispute that is
both material and genuine.” Bennett v. SEPTA, 23cv1271, 2024 WL 404959, at *6 (E.D. Pa.
Feb. 2, 2024), aff’d sub nom., Bennett v. Se. Pa. Transp. Auth., 24cv1376, 2025 WL 1248815 (3d
Cir. Apr. 30, 2025). A fact is material if it “might affect the outcome of the suit under the
governing law[.]” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute over a
material fact is “genuine” if, “based on the evidence, ‘a reasonable jury could return a verdict for
the nonmoving party.’” Bennett, 2024 WL 404959, at *6 (quoting Anderson, 477 U.S. at 248).
“In reviewing the record, a court ‘must view the facts in the light most favorable to the
nonmoving party and draw all inferences in that party’s favor.’” Holloway v. Anderson,
17cv00225, 2018 WL 3549282, at *2 (E.D. Pa. July 23, 2018) (quoting Prowel v. Wise Bus.
Forms, 579 F.3d 285, 286 (3d Cir. 2009)). The Court does not weigh evidence or make
credibility determinations at the summary judgment stage. Rather, it simply determines
“whether there is a genuine issue for trial.” Bennett, 2024 WL 404959, at *6 (citing Anderson,
477 U.S. at 249).
III. 	DISCUSSION
a. 	Defendant’s Video Evidence & the Application of Scott v. Harris
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Relying on Scott v. Harris, 550 U.S. 372 (2007), Defendant argues that Plaintiff’s
testimony is contradicted by video evidence submitted by Defendant and should be discredited
entirely in deciding both parties’ motions. See ECF No. 36-1 at 11-15. In Scott, the Supreme
Court held that where the nonmoving party’s testimony is “blatantly contradicted” by video
evidence in the record, then “a court should not adopt that version of the facts for purposes of
ruling on a motion for summary judgment.” 550 U.S. at 380.
The Third Circuit has described Scott as a “limited exception” to the general rule that a
court must view facts in the light most favorable to the nonmoving party. Patterson v. City of
Wildwood, 354 Fed. App’x 695, 697 (3d Cir. 2009). Accordingly, courts may only discredit a
party’s testimony on summary judgment where there is a “key event on which the claim was
based” and there is undisputed, unaltered video evidence of that event that conclusively
disproves the party’s testimony. See id. at 697-98 & n. 2; accord Gillespie v. Pa. State Police,
574 F. Supp. 3d 272, 288 (E.D. Pa. 2021); Hawthorne v. Mun. of Norristown, 15cv01572, 2016
WL 454401, at *4 (E.D. Pa. Feb. 5, 2016).
Those circumstances are not present here. First, there is not one “key event” on which
Plaintiff bases her claims. See Patterson, 354 F. App’x at 698. Plaintiff’s claims are based on
her ongoing work as a business coach and strategist for Defendant. See ECF No. 52 at 2 ¶ 1.
The video evidence Defendant submitted captures eleven different coaching sessions with eleven
different clients—and that is only a fraction of the sessions Plaintiff conducted while employed
by Defendant. See ECF No 36-10 (video clips); ECF No. 36-1 at 3 ¶¶ 9-10 (noting Plaintiff was
responsible for providing business coaching to 70-75 clients). A key issue here is whether
Plaintiff was exercising independent discretion throughout her employment with Defendant.
This is a highly contextual factual issue that requires interpretation of Plaintiff’s larger body of
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work over time and cannot be “conclusively” proven or disproven by videos of a couple of
selected coaching sessions. See Hawthorne, 2016 WL 454401, at *5; see also Mills v. City of
Harrisburg, 589 F. Supp. 2d 544, 552 & n. 5 (M.D. Pa. 2008) (declining to apply Scott because
the relevant recording was “susceptible to multiple reasonable interpretations”).
Second, the video footage is altered. The videos are edited to blur out Defendant’s
clients’ faces and remove responses containing clients’ confidential information. See ECF No.
40 at 4. This Court previously held that these limited alterations did not warrant striking the
video evidence from the record because only Plaintiff’s remarks are relevant to the central legal
issue in this action. See ECF No. 46 at n. 1. Nevertheless, the fact that the videos are altered—
and their context disputed by Plaintiff (see ECF No. 53 at 2)—cuts against using this evidence to
apply the very “limited” exception to the typical summary judgment standard set forth in Scott.
See Patterson, 354 F. App’x at 697. Under these circumstances, the Court cannot apply Scott
and disregard Plaintiff’s testimony. Plaintiff’s testimony, “together with all other testimony,”
including the videos, “should be heard by a jury, and its credibility judged accordingly.” See id.
at 698.
b. 	Factual Disputes Regarding the Elements of the Administrative Exemption
Considering Plaintiff’s testimony, there are genuine disputes of material fact regarding
the two disputed elements of the FLSA’s Administrative Exemption. First, whether Plaintiff’s
“primary duty is the performance of office or non-manual work directly related to the
management or general business operations of the employer or the employer’s customers.” 29
C.F.R. § 541.200(a). Defendant has presented evidence that could support a finding that
Plaintiff’s primary duty involved the execution of the company’s core business operations.
Defendant’s representative certified that Plaintiff maintained several duties that involved the
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running or servicing of the core business, including engaging in problem solving with
Defendant’s clients, maintaining and enforcing program standards, and implementing program
initiatives for clients. ECF No. 36-4 ¶ 5. Defendant’s representative also testified that Plaintiff’s
duties involved “offering insights and best practices to improve organizational performance” for
Defendant’s clients. ECF No. 36-5 at 20:11-21:2. Defendant’s “core business” is the business
coaching sessions it offers its clients. ECF No. 36-1 at 9; id. at 3 ¶ 8 (“Defendant’s business
coach functionality represents one third of its business and is a significant part of Defendant’s
operations”). Executing these sessions comprised almost all of Plaintiff’s time. See id. at 3 ¶¶ 9-
10 (noting Plaintiff was responsible for providing business coaching to 70-75 clients). Thus, a
reasonable jury could find that Plaintiff’s “primary duty” involved executing work “directly
related to the management or general business operations of the employer or the employer’s
customers.” 29 C.F.R. § 541.200(a).
Plaintiff has presented evidence that could support a contrary finding. She testified that
her work involved implementing Defendant’s pre-set frameworks and that she lacked authority to
deviate from those frameworks. See ECF No. 54-3 at 37:9-38:21, 47:3-11. Plaintiff further
testified that she did not “create or design new content, performance indicators, or strategies for
clients,” characterizing her role as “reactive, not proactive.” ECF No. 53 at 8-9 ¶¶ 12-13 (citing
ECF No. 54-3 at 47:3-11)). These facts could support Plaintiff’s position that her job duties
more closely resembled “selling a product in a retail or service establishment,” 29 C.F.R. §
541.201(a), and were not the type of strategic duties central to an employer’s business operations
contemplated by the Administrative Exemption. See ECF No. 53 at 12-13 (arguing that
Plaintiff’s job duties were “production-oriented, not administrative”); see also ECF No. 33-1 at
23:5-10, 27:7-10 (Defendant’s representative testifying that Plaintiff did not “make decisions that
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affected [Defendant’s] business operations” and that she was not “involved in policy or business
operations”).
Second, there is a genuine dispute of material fact regarding whether Plaintiff exercised
independent judgment and discretion as an employee of Defendant. See 29 C.F.R. § 541.200(a)
(third prong of the Administrative Exemption requires that the employee’s primary duty include
“the exercise of discretion and independent judgment with respect to matters of significance”).
Defendant has proffered evidence supporting its position that Plaintiff exercised independent
judgment and discretion in her coaching sessions. Defendant’s representative testified that
Plaintiff was expected to work freely and independently with clients, including making
“decisions on their growth.” ECF No. 33-1 at 22:10-16. Defendant also submitted video clips
that suggest that Plaintiff had discretion to manage her coaching sessions as she saw fit. For
instance, in Client Call 4, Plaintiff tells a client that “we’ll tailor [the framework] to what works
for you.” See ECF No. 36-10, Client Call 4 (0:52 mark); see also id., Client Call 2 (0:50 mark,
telling a client that a “cookie cutter [approach] is not [me]”). The videos also show Plaintiff
helping clients weigh different possible courses of conduct and prioritize various goals. See id.,
Client Call 4 (at 2:30 mark, Plaintiff asks client to identify “pain points” and helps the client
prioritize which to address first).
Plaintiff has also offered evidence supporting her position that she did not exercise
independent judgment and discretion. She testified that she was reading off of pre-set material
and that she was “not being paid for [her] brain,” but to “do what I was told” based on “solutions
that [Defendant] had already predetermined.” ECF No. 33-2 at 52:2-7. She further testified that
she “didn’t solve any . . . problems independently,” and “had to follow the [Defendant’s]
framework.” Id. at 51:18-22.
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IV. 	CONCLUSION
There are genuine disputes of material fact regarding each disputed element of whether
Plaintiff is subject to the FLSA’s Administrative Exemption. These factual disputes preclude a
grant of summary judgment in favor of either party. The Court will accordingly deny both
parties’ motions. An appropriate Order will follow.
BY THE COURT:
MARY KAY COSTELLO
United States District Judge
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