Court: District Court, N.D. Georgia; November 28, 2012; Federal District Court
Defendant Amerisave Mortgage Corporation faces allegations from Plaintiffs Jeffrey Zulauf, Jason Zulauf, and Kal Wayman regarding unpaid overtime for Senior Mortgage Processors (SMPs) who worked at the company. The Plaintiffs claim they routinely worked overtime without compensation during the three years prior to filing the lawsuit. They seek to represent a collective class of current and former SMPs who were similarly affected.
SMPs operate primarily from home or Amerisave's Atlanta headquarters, providing customer service related to mortgage loans without taking applications or discussing rates. Their duties involve assisting customers with the loan process using a Customer Relationship Management (CRM) System, which they must log into to perform their roles. The SMP position is full-time, requiring 40 hours a week of work, and is compensated with a minimum wage plus commissions. Amerisave has a strict policy against unauthorized overtime, locking SMPs out of the CRM System after they reach 40 hours unless they receive prior approval from their manager to work additional hours. Over the years, SMPs' earnings have ranged from $30,000 to $150,000. The organization of SMPs includes various teams, each managed by different managers, with restrictions on communication and work hours enforced through the CRM System.
SMPs can modify their timecards even if locked out of the CRM System, which raises concerns about underreporting work hours. Amerisave explicitly prohibits underreporting, mandating that all work hours be accurately documented. Employees must certify their timesheets weekly, confirming adherence to company and legal standards regarding hour reporting. Plaintiffs allege a systemic pattern of falsifying timesheets and inaccurately certifying hours worked, leading to unpaid overtime claims.
Procedurally, on May 31, 2011, named Plaintiffs filed a complaint against Amerisave on behalf of themselves and others similarly situated. Subsequently, more plaintiffs opted in. Amerisave sought to compel arbitration for certain plaintiffs and stay proceedings, while plaintiffs moved to conditionally certify a class. The court partially granted both motions, compelling arbitration for some and allowing others to proceed as a class representing those allegedly unpaid for overtime in the past three years. Currently, there are about 65 opt-in plaintiffs.
On June 22, 2012, Amerisave filed a motion to decertify the collective action, arguing that the evidence does not demonstrate that plaintiffs are "similarly situated." In response, the plaintiffs opposed the motion, presenting evidence from discovery to support their claim of similarity.
Under the Fair Labor Standards Act (FLSA), employers are required to pay non-exempt employees overtime for hours worked over 40 in a week. Employees may file lawsuits individually or collectively on behalf of others in similar situations, with written consent required for participation in collective actions.
A collective action under Section 216(b) of the Fair Labor Standards Act (FLSA) requires potential plaintiffs to opt-in, unlike a class action under Rule 23, which allows for opt-out. The district court has discretion in creating an opt-in class, following a two-step certification process encouraged by the Eleventh Circuit. The first step, or 'notice stage,' assesses whether potential class members should be notified of the action, applying a lenient standard that typically leads to conditional certification based on pleadings and affidavits. After conditional certification, potential members receive notice and can opt in, followed by discovery. The second stage, prompted by a defendant's motion for decertification, involves a more stringent 'similarly situated' standard based on a comprehensive factual record. If plaintiffs prove that all claimants are similarly situated, the collective action proceeds; if not, the court decertifies the class, dismissing opt-in plaintiffs without prejudice.
In the current case, plaintiffs argue that all claimants are similarly situated due to a company-wide policy to deprive salaried management personnel (SMPs) of overtime pay. They assert that rather than violating official policies, Amerisave operates under an unofficial and widespread 'policy-to-violate-the-policy,' enforced by top management. The court acknowledges that, if these allegations are substantiated, they could demonstrate sufficient factual similarity among the plaintiffs to support collective action. At the second certification stage, the court will evaluate the evidence provided by plaintiffs, including emails and deposition excerpts, to establish the existence of the asserted unofficial policy.
The Court examines evidence relevant to the Plaintiffs' claim of a company-wide policy encouraging the violation of hour reporting regulations for Senior Mortgage Professionals (SMPs).
1. **Evidence regarding Patrick Markert**: Plaintiffs present emails and deposition testimony indicating that Patrick Markert, owner of Amerisave, permitted Kal Wayman, a named Plaintiff, to underreport hours. However, Wayman was not a full-time SMP and primarily acted as a recruiter, which distinguishes him from other SMPs. The Court finds that this situation does not support a broader 'policy-to-violate-the-policy' for SMPs. Additionally, an email from David Ryan to Markert discussing underwriter hours does not imply any policy affecting SMPs, as underwriters and SMPs have different roles.
2. **Evidence regarding Carol Poupart**: Plaintiffs provide emails involving Carol Poupart, President of Amerisave, to demonstrate her involvement in directing employees to underreport hours. An email from SMP Jon Caffery speculates that an unidentified SMP might be working over 40 hours, but does not confirm any directive from Poupart to underreport. Another email from Caffery lists complaints about mid-level managers allegedly instructing SMPs to underreport hours; however, it does not implicate senior management. Poupart's responses clarify that there is no company policy supporting underreporting and that the company would investigate the claims. Furthermore, Poupart’s email to all SMPs reinforces the requirement for accurate time reporting and prohibition of overtime, indicating that any alleged misconduct was not sanctioned.
Overall, the Court concludes that the evidence presented does not substantiate the existence of a company-wide policy encouraging the underreporting of hours for SMPs.
Nikolaou asserts that he and other Sales Management Professionals (SMPs) routinely work more than 40 hours per week, equating their workload to that of two full-time jobs, particularly when closing 20 to 30 loans. He warns that enforcing a 40-hour limit would significantly reduce production at Amerisave. In response, Wilkes emphasized that working over 40 hours is prohibited and directed a meeting to review the overtime policy with the SMPs. Nikolaou's email does not support any alleged policy violation, as it prompted Wilkes’ reaffirmation of the overtime prohibition.
Plaintiffs present evidence, including emails and deposition testimony, to claim that Wilkes encouraged SMPs to underreport hours. The first email from Wilkes solicits referrals for new SMPs and inquires about applicants' work hour limitations. The second email criticizes SMP performance and warns of possible demotion or termination for insufficient logged hours. The third email involves Wilkes advising against providing time records for compliance reasons. Plaintiffs argue these emails imply a policy of underreporting, but the Court finds no evidence of Wilkes encouraging such behavior.
Derek Van Dam's deposition indicates that after becoming a recruiter, Wilkes told him to work as many hours as he wanted and suggested ways to bypass the time-keeping system. However, this testimony pertains specifically to Van Dam and does not generalize to other SMPs. Jon Caffery testified that Wilkes discouraged overtime in direct communications, but he also mentioned that some employees, referred to as "golden boys," advised him to work but not report overtime. Caffery did not confirm that these employees were under Wilkes’ supervision, and the Court finds his testimony insufficient to demonstrate a policy of underreporting hours. Further deposition testimony from Plaintiffs Jason Zulauf, Jeffrey Zulauf, and Kal Wayman was also presented but not detailed in this excerpt.
Plaintiffs provided testimony indicating that Wilkes instructed them to underreport their hours. However, the Court determined that Wayman’s testimony lacked relevance for all SMPs due to his part-time status. Although the Zulaufs’ testimony supports the allegation of a policy violation, it is insufficient to establish an identifiable class of similarly situated individuals at the second stage of certification. The deposition testimonies of SMPs Joseph Chiofalo and He Le Dao revealed that Bill Wood from the IT Department instructed them to retroactively change their hours, but this did not implicate senior management in altering work hours or support the allegation of a systemic policy violation.
Additionally, while Plaintiffs presented testimony and emails from various SMPs indicating that some individual managers enforced hour-underreporting policies, only a few specific managers were directly accused of promoting such practices. This evidence suggests that not all managers engaged in violations of the Fair Labor Standards Act (FLSA), and it does not substantiate the existence of a top-level policy from Amerisave promoting such violations. The evidence indicates that SMPs had diverse interpretations of the "do not work over 40 hours" policy, with some knowingly violating it. The Court noted that the Eleventh Circuit allows for examination of various factors at the second stage of collective action certification, but did not consider these factors due to the lack of evidence showing that the Plaintiffs are similarly situated. The appropriateness of a collective action hinges on whether the plaintiff employees share similar situations.
The Court has determined that factors support Amerisave's motion for decertification of the collective action. Amerisave's defenses are deemed individualized, as liability for unpaid overtime is contingent on the company's knowledge regarding each Plaintiff's off-duty work. The lack of a company-wide policy violations necessitates that Plaintiffs demonstrate that individual managers had knowledge of the unreported work, reinforcing the individualized nature of the claims. The Court references prior case law indicating that a trial involving distinct factual circumstances for each Plaintiff would be impractical, thus supporting decertification based on fairness and procedural grounds.
Despite some evidence suggesting that certain managers might have known about unreported overtime, Plaintiffs failed to provide proof that top management enforced a policy encouraging such underreporting. Consequently, the Court cannot find that the Plaintiffs are "similarly situated" as required for a collective action. As a result, the Court grants Amerisave’s Motion to Decertify the Collective Action, dismisses all claims by opt-in Plaintiffs without prejudice, and grants Plaintiffs’ Motions to Strike Consents erroneously filed for individuals who are not part of this case. Amerisave’s Motion to Compel Arbitration is deemed moot after all relevant opt-in Plaintiffs withdrew their consents. The action is stayed regarding one Plaintiff pending arbitration.
Plaintiffs fail to clarify Ryan's role at Amerisave, and the referenced email only indicates Ryan's suggestion to Markert that SMPs work many hours, lacking specificity regarding unreported overtime policies. Claims regarding Poupart's lack of follow-through on an investigation are unsupported. There is no evidence to classify Bill Wood as a manager. Testimonies from various SMPs, submitted by Amerisave, reveal differing interpretations of the company's overtime policies and reasons for policy violations. For instance, one SMP underreported hours due to fears of being locked out of the CRM System if exceeding 40 hours. Another underreported to conceal violations from the company, while another reported working overtime to increase earnings. This divergent testimony indicates that the SMPs do not share similar circumstances.
