Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-01499/USCOURTS-cand-3_05-cv-01499-0/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 28:1331 Fed. Question: Fair Labor Standards

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ALEX MALLIN, et. al.

Plaintiffs,

 v.

NATIONAL CITY MORTGAGE INC., et

al., and DOES 1-200, inclusive,

Defendants.

 

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No. 05-1499 SC

MEMORANDUM AND ORDER

AUTHORIZING NOTICE TO

COLLECTIVE CLASS

UNDER FLSA SECTION 

216(b) 

I. INTRODUCTION

Plaintiffs, former telemarketing loan originators, bring this

action against their former employer, Defendants National City

Mortgage Inc., National City Mortgage Co., and City Bank of

Indiana ("Defendants"), alleging that Defendants violated the Fair

Labor Standards Act, 29 U.S.C. §201 et seq. ("FLSA"), and state

labor laws by improperly classifying loan originators as "exempt"

employees and failing to pay overtime and minimum wages. 

Plaintiffs now move for authorization to send notice to all

similarly situated employees under §216(b) of the FLSA, advising

them of their right to join in this lawsuit for the purpose of

pursuing their federal claims. Defendants oppose the motion,

arguing that Plaintiffs' claims are not appropriate for collective

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class treatment. For the reasons discussed herein, this Court (1)

conditionally certifies a class for the limited purpose of

providing potential class members with notice of this action and

granting them the opportunity to join, and (2) resolves the

dispute between the parties as to the content and form of the

notice to be sent to former loan originators by modifying

Plaintiffs' revised proposed notice. 

II. BACKGROUND

The named Plaintiffs in this action are eight individuals who

formerly worked for Defendants as "loan originators" in

Defendants' in-house Preferred Lending Center ("PLC") in Santa

Rosa, California. Plaintiffs' Memorandum in Support of Motion for

Notice to Collective Class at 1 ("Pls.' Mem."). The putative

class for purposes of the federal claims is comprised of all

current and former employees of Defendants who worked as

telemarketing loan originators between August 5, 2002 and the

present. Id at 5. 

Defendants operate five PLCs throughout the country: Santa

Rosa and Century City, California; Grandville and Kalamazoo,

Michigan; and Miamisburg, Ohio. Declaration of Alan Avery ¶5

("Avery Decl."). There are approximately 144 total loan

originators currently employed at the five PLCs. Id. 

Loan originators employed by Defendants are categorized by

the type of loan sold or method by which the sales lead is

generated. Id ¶6. Thus, loan originators are categorized as

"inbound" if they specialize in handling calls made to the PLC,

"outbound" if they specialize in making calls from the PLC,

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"equity" if they specialize in second mortgages or lines of

credit, and "subprime" if they specialize in assisting customers

with less than ideal credit ratings. Id.

Prior to January 2005, Defendants classified all loan

originators working in their PLCs as "exempt" employees, and

therefore did not consider them eligible for overtime pay. Id

¶¶16-17. In January 2005, however, Defendants "reevaluated" their

pay practices and reclassified loan originators as non-exempt

employees. Id ¶17. Accordingly, in March 2005, Defendants issued

payments to loan officers to compensate them for overtime worked

prior to January 1, 2005. See, e.g., Declaration of Mike Smith

¶10 ("Smith Decl."). Shortly thereafter, Plaintiffs initiated the

instant action. Relevant to this motion, Plaintiffs allege that

loan originators were not exempt employees, and that Defendants

failed to compensate Plaintiffs for all overtime hours worked

during the class period. Additional state law causes of action

contained in the complaint will presumably be the subject of a

forthcoming motion for Rule 23 class certification; at this

juncture, the Court considers only whether it should authorize

notice to potential class members advising them of their right to

join as plaintiffs in pursuing the FLSA claims. 

III. DISCUSSION

The Fair Labor Standards Act provides that an action may be

brought against an employer "by any one or more employees for and

in behalf of himself or themselves and other employees similarly

situated." 29 U.S.C. §216(b). Any potential plaintiff who seeks

to join the collective action must affirmatively "opt-in" to the

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suit by filing a written notice of consent with the court. Id. 

District courts may facilitate notice to potential plaintiffs in

order to implement the collective action provision of §216(b). 

See Hoffman-La Roche Inc. v. Sperling, 493 U.S. 165, 169-70

(1989).

Thus, the threshold question in any FLSA case where

plaintiffs seek authorization to notify potential plaintiffs of

their right to join in the collective action is whether proposed

class members are "similarly situated" with respect to the named

plaintiffs. See, e.g., Leuthold v. Destination America, 224

F.R.D. 462, 466 (N.D. Cal. 2004). The statute does not define

"similarly situated," and the Ninth Circuit has not yet endorsed a

test or definition for that term. See id. 

In determining how to evaluate whether proposed class members

are "similarly situated," courts in this circuit have proceeded

under an ad hoc, two-step approach, first issuing notice to

prospective plaintiffs, followed by a later determination (usually

precipitated by a motion to decertify) of whether the class

members are truly similarly situated. See Leuthold, 224 F.R.D. at

466; Pfohl v. Farmers Insurance Group, No. C03-3080, 2004 WL

554834 (C.D. Cal. Mar. 1, 2004); Wynn v. Nat'l Broadcasting Co.

Inc., 234 F. Supp.2d 1067 (C.D. Cal. 2002). 

Under this two-tiered approach, courts must first determine

whether potential class members should be notified of the action,

the standard for which has been widely described as "lenient." 

See Leuthold 224 F.R.D. at 467; Pfohl 2004 WL 554834 at *2;

Wertheim v. State of Arizona, No. Civ. 92-453, 1993 WL 603552 at

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*1 (D. Ariz. Sept. 30, 1993). Courts have explained that in order

to satisfy this standard, plaintiffs must show only that "some

identifiable factual or legal nexus binds together the various

claims of the class members in a way that hearing the claims

together promotes judicial efficiency and comports with the broad

remedial policies underlying the FLSA." Wertheim, 1993 WL 603552

at *1; see also Realite v. Ark Restaurants Corp., 7 F. Supp. 2d.

303, 306 (S.D.N.Y. 1998) (noting that "courts have found that

plaintiffs can meet this burden by making a modest factual showing

sufficient to demonstrate that they and potential plaintiffs were

victims of a common policy or plan that violated the law");

Sperling v. Hoffmann-La Roche, Inc., 118 F.R.D. 392, 407 (D.N.J.

1988) ("In general, however, courts appear to require nothing more

than substantial allegations that the putative class members were

together the victims of a single decision, policy, or plan..."). 

 In this case, the fact that loan originators were previously

classified as exempt is not in dispute. See Avery Decl. ¶17. 

Although this Court declines to express any opinion with respect

to Plaintiffs' assertion that Defendants "essentially admitted"

that loan officers were misclassified by undertaking the January

2005 reclassification, the Court does note that the

reclassification apparently applied to all loan originators,

regardless of the PLC in which they worked. Id. Furthermore,

although Defendants have made much of the different specialties of

each loan originator and the different working hours and workplace

policies of each PLC, a review of the filings and declarations

submitted reveals that, as far as is relevant to this motion, the

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everyday tasks and responsibilities of each loan originator do not

reveal a great deal of variance, even across specialty areas or

PLCs. Compare Declarations of Doug DeLong ¶3, Mike Smith ¶¶4-5,

and Marianne Koukios ¶3 with Declarations of Gerald Slaten ¶2,

Drinda Milliken ¶2, and Kelly Sheets ¶2. 

Although the evidence submitted by Plaintiffs to support

their claim that loan originators regularly worked overtime is

hardly robust and is not corroborated by the declarations

submitted by Defendants, this Court finds that Plaintiffs'

allegations nonetheless suffice to meet the lenient standard. See

Leuthold, 224 F.R.D. at 468 (finding that allegations of complaint

along with affidavits submitted by lead plaintiffs alleging that

they regularly worked overtime were sufficient to meet the

standard for conditional certification). Therefore, taking notice

of the light burden imposed on plaintiffs moving for conditional

certification, this Court finds that Plaintiffs in the instant

case have properly alleged a companywide policy of improperly

classifying loan originators as exempt employees, and therefore

failing to pay overtime wages in violation of the FLSA. 

IV. CONCLUSION

In sum, Plaintiffs have alleged that Defendants' policy of

classifying loan originators as exempt from overtime laws runs

afoul of the Fair Labor Standards Act, and that they are therefore

entitled to collect payments for overtime hours worked. Those

allegations, along with the declarations of the named Plaintiffs,

are sufficient to meet the lenient standard imposed on plaintiffs

seeking conditional class certification. Although Defendants have

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raised several potentially valid concerns regarding the differing

work schedules, workplace policies, and state labor laws that

applied to loan originators at Defendants' PLCs, those concerns do

not affect this Court's decision with respect to the present

motion to conditionally certify a collective class for purposes of

providing notice to potential class members. Defendants will have

their opportunity to challenge whether Plaintiffs are actually

similarly situated after the factual record has been developed

further. At this juncture, however, the Court is satisfied that

Plaintiffs have met their burden and may notify putative class

members of the pendency of the action. 

Accordingly, it is hereby ORDERED that Defendants have 21

days from the date of this Order to provide Plaintiffs with the

names and last known addresses of all current and former loan

originators who worked for Defendants between August 5, 2002 and

the present. It is further ORDERED that Plaintiffs shall bear

responsibility for mailing notice to such current and former loan

originators, which notice shall take the form and content as

provided in Plaintiffs' revised proposed notice, as modified by

this Court. 

IT IS SO ORDERED:

July 15, 2005 /s/ Samuel Conti 

 UNITED STATES DISTRICT JUDGE

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