1 

IN THE UNITED STATES DISTRICT COURT 

FOR THE SOUTHERN DISTRICT OF OHIO 

EASTERN DIVISION 

GREGORY LUTZ, et al., 

 Case No. 2:12-cv-01091 

 Plaintiffs, JUDGE GREGORY L. FROST 

 Magistrate Judge Norah McCann King 

v. 

 

HUNTINGTON BANCSHARES INC., et al., 

 Defendants. 

OPINION & ORDER

 This matter is before the Court for consideration of the following motions and 

corresponding briefs: Defendants’ motion for summary judgment, or, in the alternative, 

Defendants’ motion to decertify the collective action class (ECF No. 62); Plaintiffs’ crossmotion for summary judgment and response in opposition to Defendants’ motion (ECF No. 65); 

Defendants’ response in opposition to Plaintiffs’ cross-motion for summary judgment and reply 

in support of their motion for summary judgment (ECF No. 70); and Plaintiffs’ reply in support 

of their cross-motion for summary judgment (ECF No. 71). Also before the Court are the 

following motion and corresponding briefs: Plaintiffs’ motion for class certification pursuant to 

Federal Rule of Civil Procedure 23 (ECF No. 63); Defendants’ response in opposition (ECF No. 

66); and Plaintiffs’ reply (ECF No. 69). 

The briefing before the Court presents the following three issues: (1) whether Defendants 

correctly classified their Home Lending Underwriters under the Fair Labor Standards Act, 29 

U.S.C. § 201, et seq. (“FLSA”), and, if Defendants misclassified their Home Lending 

Underwriters, (2) whether the Court should decertify the FLSA collective action class that it 

conditionally certified on April 19, 2013, and (3) whether the Court should certify an Ohio class 

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under Rule 23 with respect to Plaintiffs’ state-law claim. For the reasons that follow, the Court 

concludes that Defendants correctly classified their Home Lending Underwriters as 

administratively exempt employees, such that Defendants are entitled to summary judgment. 

The Court does not reach the issues of whether it should decertify the FLSA collective action 

class or whether it should certify an Ohio state-law class under Rule 23. 

I. BACKGROUND 

A. The Parties’ Claims 

Plaintiffs Gregory Lutz and Dorothy Becker are former employees of Defendants. 

Plaintiffs, who are pursuing their Complaint on behalf of themselves and other similarly-situated 

employees, allege that Defendants violated the FLSA and Ohio state law by failing to pay them 

overtime wages to which they are entitled. Plaintiffs also allege that Defendants violated Article 

II § 34a of Ohio’s Constitution by failing to keep accurate wage and hour records. 

On April 19, 2013, the Court conditionally certified a collective action under the FLSA 

that includes Defendants’ current and former Home Lending Underwriters. (ECF No. 24.) 

Approximately twenty-eight individuals opted to join the FLSA collection action class.1

 Two of 

those opt-in plaintiffs, George Miller and Amy Whitacre (collectively with Lutz and Becker, 

“Plaintiffs”), were selected to represent the FLSA collective action class. 

On April 1, 2014, Plaintiffs Lutz and Becker filed a motion to certify an Ohio class action 

with respect to their state-law claim. That motion currently is pending before the Court. 

The crux of this dispute is set forth in the parties’ competing motions for summary 

judgment. In their motion, Defendants assert that they were justified in withholding overtime 

wages because Plaintiffs are “administratively exempt” employees, who are not subject to the 

 

1

 Defendants assert that only twenty-two individuals opted to join the collective-action class. This discrepancy, 

however, is irrelevant to the Court’s analysis. 

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FLSA’s overtime provisions.2 Plaintiffs contend that neither they nor the members of the FLSA 

collective action class qualify for the administrative exemption. 

B. Background Facts 

The following facts are undisputed. Defendant Huntington Bancshares, Inc. is the parent 

company of Defendant Huntington National Bank (“the Bank”). The Bank provides an array of 

banking services, including commercial, small business, and consumer banking services, 

mortgage banking services, treasury management and foreign exchange services, equipment 

leasing, wealth and investment management services, trust services, brokerage services, 

customized insurance brokerage and service programs, and other financial products and services. 

At issue in this case is the Bank’s home lending business, which is divided between the 

Consumer group and the Mortgage group. Home Lending Underwriters in the Consumer group 

are referred to as “Consumer HLUs,” and Home Lending Underwriters in the Mortgage group 

are referred to as “Mortgage HLUs.” Plaintiffs Lutz, Becker, and Miller are former Consumer 

HLUs. Plaintiff Whitacre is a current Mortgage HLU. 

Defendants note several differences between Consumer HLUs and Mortgage HLUs; 

however, they classify all HLUs as administratively exempt employees under the FLSA. The 

Court therefore examines the job responsibilities that all HLUs share to determine whether the 

administrative exemption applies to the position as a whole. 

1. Development and sale of loan products 

HLUs do not develop the Bank’s loan products. The Bank’s Product Development 

Group—an independent group within the Bank—designs its loan products and creates product 

portfolios for each of those products. That group then sets certain risk guidelines, such as a 

 

2

 Defendants also note that Plaintiffs’ state-law claims are subject to the same exemption analysis as their FLSA 

claim. See Ohio Rev. Code § 4111.03(A). 

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maximum loan-to-value or debt-to-income ratio, that the Bank is willing to accept. Another 

group, the Secondary Marketing Group, then sets the interest rates for the various loan products. 

HLUs do not sell the Bank’s loan products and do not directly interact with the Bank’s 

customers. A loan originator (a separate position from an HLU) begins the sale process by 

discussing various loan products with a customer. The loan originator then selects a loan product 

that meets the customer’s needs, and begins the application process. A loan processor (another 

separate position within the Bank) works with the customer to gather the required documents and 

complete the loan application. 

For most loans, the customer’s information is then uploaded into the Bank’s underwriting 

software program, which generates an electronic file and suggested actions for each loan 

application. The file is then placed in an electronic queue for review by an HLU. 

2. The HLUs’ primary responsibilities 

An HLU’s job is twofold: he or she must assess the loan application to ensure that the 

information contained therein is accurate and then decide whether the loan is of the type that the 

Bank will accept. To confirm the accuracy of a loan application, an HLU must review the 

documents provided by the customer and compare those documents to a credit bureau report. An 

HLU may decide that additional materials, such as a property appraisal, are necessary for a full 

review of the application. If the HLU determines that additional materials are necessary, the 

loan processor works with the customer to gather those additional documents. 

The HLU must then determine whether the Bank will accept the loan. To do so, the HLU 

must review the calculations and recommendations generated by the Bank’s underwriting 

software, then analyze the file and decide whether to go along with or override the software’s 

recommendations. If the loan is one that is not run through the underwriting software, the HLU 

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must manually underwrite the file. If the loan is one that generates a “refer” or “refer eligible” 

notation (such as an FHA government loan), the loan application will be referred without 

suggestions to the HLU, who must use his or her “discretion to determine whether [the loan is] 

insurable or not.” (Whitacre Depo, ECF No. 60, at 96.) 

To make the ultimate loan determination, the HLU must apply the Bank’s guidelines and 

lending criteria, as well as any applicable regulations, to the loan application to determine 

whether it falls within the level of risk the Bank is willing to accept. The guidelines relevant to 

the HLU’s job function include: the Bank’s Credit Policy Manual and Fair and Responsible 

Lending Policy, Product Profiles and rate sheets for each loan product, manuals and guides 

specific to each loan product (if applicable), and other applicable regulations. Those policies 

exist, at least in part, because “[e]qual treatment of all applicants without regard to race, gender, 

marital status, age or any other Prohibited Basis is an essential requirement of all Credit 

Transactions.” (ECF No. 65-16, at 2.) As such, HLUs “are expected to exercise their judgment 

regarding credit decisions objectively.” (ECF No. 65-2, at 13.) 

Although an HLU’s decision whether to approve a loan application necessarily will be 

influenced by the guidelines and manuals referenced above, an HLU may sometimes go outside 

those guidelines/manuals and take action based on his or her experience and/or judgment. For 

example, in analyzing a loan application, an HLU may determine that the Bank can accept a loan 

only if additional stipulations are placed on that application. The HLU can, for instance, require 

that a customer pay off certain credit cards before the Bank will accept the loan. Plaintiffs 

acknowledge that these stipulations are not automatically generated by loan software and do not 

come from any manual or guidelines. Rather, they are additional safeguards designed to protect 

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the Bank’s and the customer’s long-term interests. Once attached, the stipulations placed on a 

loan application by the HLU cannot be ignored. 

 An HLU also can make exceptions or adjustments to the Bank’s lending criteria in certain 

circumstances. For example, if a loan application does not meet the Bank’s criteria, but the 

customer has a history with the Bank, reserves, reasons for derogatory credit, assets with the 

Bank, pay history or time at his or her residence and job, the HLU can make an exception or 

adjust the required criteria in order to accept the loan. HLUs are permitted to make two or three 

exceptions/adjustments to a loan application without consulting their managers.3 

 An HLU also can identify “counteroffers” that would change the initial loan application 

but place that application within terms that would be acceptable to the Bank. If an HLU 

proposes a counteroffer, the loan processor or loan originator works with the customer to 

determine whether the counteroffer is acceptable. 

 Finally, HLUs are permitted to deviate from the Bank’s lending criteria if a loan seems 

suspicious or against the customer’s best interests. For example, if the loan application is one 

that typically would meet the Bank’s lending criteria, but the customer is an elderly individual 

attempting to trade a two-year note for a thirty-year note, the HLU would inquire further to 

ensure that the customer understands what he or she is requesting. The HLU therefore might end 

up disapproving a loan application that otherwise would have been approved under the Bank’s 

lending criteria. 

 Once the HLU has considered the software recommendations and applied the guidelines, 

applicable regulations, and any exceptions or other considerations to the loan application, he or 

 

3

 Plaintiff Whitacre testified that she did not believe Mortgage HLUs can independently make exceptions on a loan 

application, (Whitacre Depo, ECF No. 60, at 109–110); however, they can identify compensating factors (such as 

high reserves and high credit scores, for example) to make up for loan application deficiencies in certain types of 

loans. 

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she will either clear the loan for approval or deny the application. At that point, the HLU’s role 

in the loan process ends. Approved loans move into the processing phase, while disapproved 

loan applications “go[] back to the branch as a turndown.” (Becker Depo, ECF No. 56, at 45.) 

HLUs have authority to approve loans up to one million dollars. 

3. The Bank’s hiring, supervision, and evaluation of HLUs 

The Bank employs several HLUs in its Columbus, Ohio office. HLUs are grouped into 

two positions: “Senior Underwriters,” which requires a high school diploma and 3–5 years of 

underwriting experience, and “Underwriters,” which requires a high school diploma and 1–3 

years of underwriting experience. (ECF No. 65-9, at 2–19.) HLUs generally work out of the 

Bank’s offices, although they occasionally work out of their homes. 

 To supervise its HLUs, the Bank conducts periodic audits of loan applications. During 

that process, a Pre-Funding Audit Team reviews selected loans prior to and after the HLU 

approves or disapproves the loan application. The Audit Team compares its work to the HLU’s 

work and determines whether there are “errors or inconsistencies found.” (Cline Depo, ECF No. 

58, at 110.) At that point, the HLU can review the Audit Team’s conclusion and explain why he 

or she does not agree.4 

Some mortgage loans also are subject to independent audits by investors. In those cases, 

if a HLU receives an audit letter from an investor, the HLU will have the opportunity to defend 

his or her decision and explain why he or she does not feel there was an error. 

HLUs are evaluated based, at least in part, on the number of times they access different 

loan applications on a given day. An HLU is expected to look at between three to five loan files 

per day, whether it be new loan applications or old applications that he or she must revisit. See

 

4

 Ms. Cline’s statements regarding the Audit Team relate only to Mortgage HLUs; however, it appears later in her 

deposition that a similar system applies to Consumer HLUs. See id. at 112–15. 

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id. at 97–98. The more files an HLU accesses per day, the higher the rating assigned to that 

HLU for purposes of evaluating his or her incentive-based compensation. Faster “turn times” 

between an HLU’s initial review of a loan and his or her final decision on that loan also result in 

a higher rating for that HLU. (Id. at 109.) Additional factors relevant to an HLU’s 

compensation include the quality of his or her work (based on feedback from the various audit 

procedures discussed above), and internal reviews from other Bank employees. (Id. at 112.) 

HLUs are not evaluated based on whether the approved loan applicants ultimately default 

on their loans. The Bank does not keep track of such information at the underwriter level. 

4. Hours worked and compensation 

Plaintiffs testified that their hours fluctuated on a weekly basis. Some weeks, they 

worked more than forty hours a week, and some weeks they worked less. Plaintiffs understood 

that, regardless of the number of hours they worked in any given week, their salary would remain 

the same and they would not receive overtime compensation. Plaintiffs received salaries that 

ranged from $52,376.50 to $71,000.00 per year. 

5. The Banks’ decision to classify HLUs as exempt 

To make decisions regarding wage and hour compliance, the Bank employs a specialized 

and trained Compensation Consultant, who works together with the Bank’s management, human 

resources department, and in-house legal counsel (collectively, “Compensation Group”). 

Following the Second Circuit Court of Appeals’ 2009 decision in Davis v. J.P. Morgan Chase & 

Co., 587 F.3d 529 (2d Cir. 2009), discussed in more detail below, the Compensation Group 

discussed the HLUs’ exempt classification. After reviewing the HLUs’ duties and 

responsibilities and comparing those duties to the position discussed in Davis, the Compensation 

Group determined that HLUs should remain exempt from the FLSA’s overtime requirements. 

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The Compensation Group met again in 2012 to conduct a wage and hour compliance 

review. At that time, the Compensation Group again reviewed the job duties and responsibilities 

for the HLU position, and again concluded that the position should retain its exempt 

classification. 

II. ANALYSIS 

A. Standard of Review 

Federal Rule of Civil Procedure 56 provides that summary judgment is appropriate “if the 

movant shows that there is no genuine dispute as to any material fact and the movant is entitled 

to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The Court may therefore grant a motion 

for summary judgment if the nonmoving party who has the burden of proof at trial fails to make 

a showing sufficient to establish the existence of an element that is essential to that party’s case. 

See Muncie Power Prods., Inc. v. United Tech. Auto., Inc., 328 F.3d 870, 873 (6th Cir. 2003) 

(citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). 

In viewing the evidence, the Court must draw all reasonable inferences in favor of the 

nonmoving party, which must set forth specific facts showing that there is a genuine issue of 

material fact for trial. Id. (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 

U.S. 574, 587 (1986)); Hamad v. Woodcrest Condo. Ass’n, 328 F.3d 224, 234 (6th Cir. 2003). A 

genuine issue of material fact exists “if the evidence is such that a reasonable jury could return a 

verdict for the nonmoving party.” Muncie, 328 F.3d at 873 (quoting Anderson v. Liberty Lobby, 

Inc., 477 U.S. 242, 248 (1986)). Consequently, the central issue is “ ‘whether the evidence 

presents a sufficient disagreement to require submission to a jury or whether it is so one-sided 

that one party must prevail as a matter of law.’ ” Hamad, 328 F.3d at 234–35 (quoting 

Anderson, 477 U.S. at 251-52). 

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In this case, the parties dispute the proper application of the FLSA’s overtime provisions. 

The FLSA requires employers to pay their employees time-and-a-half for work performed in 

excess of forty hours per week, 29 U.S.C. § 207(a)(1), but exempts employers from this 

requirement with respect to individuals “employed in a bona fide executive, administrative, or 

professional capacity.” 29 U.S.C. § 213(a)(1); see also Martin v. Ind. Mich. Power Co., 381 

F.3d 574, 578 (6th Cir. 2004). Defendants contend that Plaintiffs fall within the “administrative” 

exemption such that they are not entitled to overtime under the FLSA. 

“The exemptions to the FLSA’s overtime provisions are ‘to be narrowly construed 

against the employers seeking to assert [them].’ ” Martin, 381 F.3d at 578 (quoting Douglas v. 

Argo–Tech Corp., 113 F.3d 67, 70 (6th Cir. 1997)). “[T]he employer bears not only the burden 

of proof, but also the burden on each element of the claimed exemption.” Id. Defendants must 

prove each element of the claimed exemption by a preponderance of the evidence. Renfro v. Ind. 

Mich. Power Co., 497 F.3d 573, 575 (6th Cir. 2007). 

“Because the burden of proof is shifted, [the plaintiff] is entitled to summary judgment 

unless [the defendant] can come forward with evidence at least creating a genuine issue of 

material fact as to whether [the plaintiff] meets each and every element of the exemption.” 

Martin, 381 F.3d at 578. “If [the defendant] fails to proffer such evidence, not only must its 

motion for summary judgment be denied, but summary judgment for [the plaintiff] must be 

granted.” Id. 

“The question of how an employee spends his time is a question of fact, while the 

question of whether his activities fall within an exemption is a question of law.” Jastremski v. 

Safeco Ins. Cos., 243 F. Supp. 2d 743, 747 (N.D. Ohio 2003). Here, although the parties 

characterize Plaintiffs’ job responsibilities differently, the facts regarding the scope of Plaintiffs’ 

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job responsibilities are undisputed. As such, the question of whether Plaintiffs are properly 

classified as exempt administrative employees is a question of law for the Court. See id.; see 

also Murray v. Ohio Cas. Corp., No. 2:04-CV-539, 2005 WL 2373857, at *3 (S.D. Ohio Sept. 

27, 2005). 

B. The FLSA’s Administrative Exemption 

 As stated above, the FLSA exempts from its overtime provisions those employees 

employed in a “bona fide administrative capacity.” 29 U.S.C. § 213(a)(1). The term “employed 

in a bona fide administrative capacity” refers to any employee: 

(1) Compensated on a salary or fee basis at a rate of not less than $455 per week 

(or $380 per week, if employed in American Samoa by employers other than 

the Federal Government), exclusive of board, lodging or other facilities; 

(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). 

a. Salary Requirement 

The parties do not dispute that Plaintiffs meet the salary requirement of $455 per week 

set forth in § 541.200(a)(1). Indeed, Plaintiffs received salaries that ranged from $52,376.50 to 

$71,000 per year, which far exceeds the $455 per week salary requirement. Section 

541.200(a)(1) therefore is not at issue in this case. 

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b. “Office or Non-Manual Work Directly Related to the Management or General 

Business Operations of the Employer” 

1. Regulations 

Section 541.200(a)(2) sets forth a two-part inquiry. First, Defendants must prove that 

Plaintiffs performed “office or non-manual work,” which is not in dispute in this case. Plaintiffs 

concede that they perform most of their work at their desks and that their duties generally are 

office-based so as to satisfy the “office or non-manual work” requirement. 

Second, Defendants must prove that Plaintiffs’ primary duties consist of the performance 

of 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)(2). The term “primary duty” means “the 

principal, main, major, or most important duty that the employee performs.” Id. § 541.700(a). 

Here, although the parties characterize Plaintiffs’ primary duties differently, their 

characterizations do not differ in substance. The Court concludes that Plaintiffs’ primary duties 

consist of (1) reviewing loan application files to evaluate the creditworthiness of customers 

applying for home loans, and (2) determining whether the borrower qualifies for the loan that he 

or she has applied for—in other words, whether the Bank will approve or disapprove the loan. 

See Pls.’ Mot., ECF No. 65, at 25; Defs.’ Mot., ECF No. 62, at 27.5

 

At issue in this case is whether those duties are directly related to the Bank’s 

management or general business operations. “The phrase ‘directly related to the management or 

general business operations’ refers to the type of work performed by the employee.” 29 C.F.R. § 

541.201(a) (emphasis added). “To meet this requirement, an employee must perform work 

directly related to assisting with the running or servicing of the business, as distinguished, for 

 

5

 Defendants note that Plaintiffs performed additional job duties during their tenure at the Bank, including working 

on special project teams and advising the Bank’s management in the case of a corporate acquisition. Because 

Defendants do not argue that these job duties are part of Plaintiffs’ “primary duties,” however, the Court will not 

consider them in its analysis. 

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example, from working on a manufacturing production line or selling a product in a retail or 

service establishment.” Id. The Code of Federal Regulations provides the following additional 

guidance: 

Work directly related to management or general business operations includes, but 

is not limited to, work in functional areas such as tax; finance; accounting; 

budgeting; auditing; insurance; quality control; purchasing; procurement; 

advertising; marketing; research; safety and health; personnel management; 

human resources; employee benefits; labor relations; public relations, 

government relations; computer network, internet and database 

administration; legal and regulatory compliance; and similar activities.

Id. § 541.201(b) (emphasis added). 

2. Sixth Circuit Case Law 

The distinction between “running or servicing of the business” and “working on a 

manufacturing production line or selling a product in a retail or service establishment,” id. § 

541.201(a), has given rise to what many courts refer to as the “administrative/production 

dichotomy.” See, e.g., Foster v. Nationwide Mut. Ins. Co., 710 F.3d 640, 644 (6th Cir. 2013). 

Under the dichotomy, “production employees (whose job it is to generate the product or service 

the business offers to the public) will not qualify for the exemption.” Id. Stated differently, if a 

court determines that an employee generates, or “produces” the product/service that the 

employer offers to the public, then that employee is a “production” employee who cannot qualify 

for the administrative exemption. See id.; see also Renfro v. Ind. Mich. Power Co., 370 F.3d 

512, 517–18 (6th Cir. 2004). If, on the other hand, the employee does not “produce” the 

employer’s product or service, the court must undertake an additional analysis to determine 

whether the employee performs an “administrative” function within the meaning of 29 C.F.R. § 

541.201. See, e.g., Martin v. Ind. Mich. Power Co., 381 F.3d 574, 583 (6th Cir. 2004). 

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The administrative/production dichotomy is not useful in every case. Schaefer v. Ind. 

Mich. Power Co., 358 F.3d 394, 402 (6th Cir. 2004). Rather, “the analogy . . . is only useful to 

the extent that it is a helpful analogy in the case at hand.” Id. at 402–03. For example, in a case 

involving an environmental specialist who shipped radioactive waste for an electric production 

company, the Sixth Circuit Court of Appeals found the administrative/production dichotomy not 

useful and declined to utilize it. See id. 

Notwithstanding the above, Sixth Circuit case law suggests that the proper course of 

action is to begin with the administrative/production dichotomy and determine whether it can be 

useful by analogy. See, e.g, Foster, 710 F.3d at 645. The first question, therefore, is what 

constitutes “production” work under the administrative/production dichotomy. 

Courts in this circuit have interpreted the term “production” narrowly. For example, in 

Foster, the Sixth Circuit analyzed the job responsibilities of an insurance company’s “special 

investigators” who analyzed suspicious claims and made recommendations as to whether the 

company should pay or deny those claims. 710 F.3d at 642. Because the special investigators 

“do not write or sell insurance policies,” they could not be characterized as production 

employees. Id. at 645.6 Similarly, in Renfro, the Sixth Circuit rejected the plaintiff’s contention 

that an electric company’s “planners,” who took job orders and created work packages that the 

plant’s craft workers would use to perform the work in the field, were performing production 

work. 370 F.3d at 514–18. See also Cameron v. Abercrombie & Fitch Co., No. 2:10-cv-631, 

2012 WL 4057240, at *4–5 (S.D. Ohio Sept. 14, 2012) (holding that the plaintiff, who performed 

quality control for a clothing company, was not a production employee because, inter alia, “she 

 

6

 Plaintiffs suggest that the Sixth Circuit’s reference to “write” refers to underwriters. Viewed in context of the 

court’s opinion, however, the Sixth Circuit’s use of the term “write” appears to refer to those employees who 

actually create the insurance policies. See 710 F.3d at 645 (“Nationwide is in the business of creating and marketing 

insurance policies to the public . . . [s]ince the [plaintiffs] do not write or sell insurance policies, the district court did

not err in concluding that [they] cannot be fairly characterized as production employees.” (internal citations 

omitted)). 

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was not involved in the manufacturing or selling of [the employer’s] product in the manner 

contemplated by the regulations,” and rejecting the plaintiff’s argument that her “duties were 

directly related to the production of clothes”); Caveness v. Vogely & Todd, No. 3:10-0650, 2011 

WL 3841649, at *4 (M.D. Tenn. Aug. 30, 2011) (holding that an employee of an automobile 

repair shop who made repair estimates, set repair schedules, and assigned repair work was not a 

production employee); LaCourse v. GRS III, No. 05-73613, 2006 WL 3694623, at *19 (E.D. 

Mich. Dec. 13, 2006) (finding that a training consultant who “develop[ed] manufacturing and 

repair methods and systems on new products” for General Motors was not a production 

employee because he “was not engaged in producing motor vehicles; rather, he taught the 

production employees how to conduct certain repairs so the assembly line could proceed”). 

These cases show that the definition of “production” in the administrative/production dichotomy 

is limited to those employees who actually create or sell the product/service the employer offers; 

it does not encompass any employee whose job responsibilities are related to the production 

process.7

 

If a court determines that the plaintiff is not a production employee, it must then move to 

the second step of the analysis and determine whether he or she performs administrative work. 

Work that is “ancillary to an employer’s principal production activity” is administrative. Renfro, 

370 F.3d at 517 (citing Martin v. Cooper Elec. Supply Co., 940 F.2d 896, 904 (3d Cir. 1991)). 

As such, “planners” for an electricity company performed work that “serviced” the business 

within the meaning of the administrative exemption, because: 

 

7

 Even the cases Plaintiff cites, in which the Sixth Circuit found that the administrative exemption did not apply, do 

not expand the definition of production. See Martin, 381 F.3d at 582 (finding that a technology employee who 

maintained an electric company’s computer system was not exempt without characterizing the employee’s job duties 

as “production” under the dichotomy); Schaefer, 358 F.3d at 402–03 (declining to utilize the 

administrative/production dichotomy). 

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AEP’s principal production activity is generating electricity, and the product it 

offers the public is electricity; the planners’ primary duty—creating plans for 

maintaining equipment and systems in the nuclear plant—is ancillary to AEP’s 

principal production activity of generating electricity. 

Id. at 518. See also Foster, 710 F.3d at 645 (concluding that special investigators who 

investigated suspicious insurance claims “performed work for an insurance company that is 

ancillary to an insurance company’s primary production activity”); but see Schaefer, 358 F.3d at 

402 (rejecting the argument that an environmental specialist who shipped radioactive materials 

for an electric company was performing administrative work since it was “collateral to the 

production of electricity”). 

 If the guidance set forth above does not resolve the issue, courts must analogize between 

the job duties at issue and the examples in § 541.201(b) of the Code of Federal Regulations to 

determine whether the duties are administrative. The Court therefore must ask whether 

Plaintiffs’ job duties are similar to “work in functional areas such as tax; finance; accounting; 

budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; 

research; safety and health; personnel management; human resources; employee benefits; labor 

relations; public relations, government relations; computer network, internet and database 

administration; legal and regulatory compliance; and similar activities.” 29 C.F.R. § 541.201(b); 

see also Foster, 710 F.3d at 645 (concluding that “an insurance company’s investigation of 

suspicious claims is similar to some of these functional areas”). 

 Plaintiffs rely heavily on two Sixth Circuit cases, Schaefer v. Indiana Michigan Power 

Company and Martin v. Indiana Michigan Power Company, in which the court analogized a 

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plaintiffs’ job duties to the now-nonexistent 29 C.F.R. § 541.205(b).8 In Schaefer, after finding 

the administrative/production dichotomy of little value, the court concluded that the plaintiff’s 

job duties (shipping radioactive waste for an electric company) were not analogous to “advising 

the management, planning, negotiating, representing the company, purchasing, promoting sales, 

and business research and control.” 358 F.3d at 403 (citing 29 C.F.R. § 541.205(b)). The Martin

court reached the same conclusion regarding a technology professional who maintained a 

company’s computer systems. 381 F.3d at 582 (citing and distinguishing § 541.205(b)). 

 The current version of the applicable regulations, effective August 23, 2004, changes the 

analysis from whether a plaintiff’s job duties consist of “advising the management, planning, 

negotiating, representing the company, purchasing, promoting sales, and business research and 

control” to whether the work is in a “functional area” that is “directly related to assisting with the 

running or servicing of the business.”9

 29 C.F.R. § 541.201. Given this change, as well as the 

fact that the position of “internet and database administration”—a seemingly analogous position 

to the Martin plaintiff’s—was added in 2004 as a “functional” job duty that could qualify for the 

administrative exemption, Martin and Schaefer are not particularly instructive on the issue of 

whether Plaintiffs’ job duties are “directly related to management or general business operations” 

pursuant to § 541.200(a)(2). 

 

8

 Prior to the 2004 revisions to the Regulations, § 541.205(b) read as follows: “The administrative operations of the 

business include the work performed by so-called white-collar employees engaged in “servicing” a business as, for, 

example, advising the management, planning, negotiating, representing the company, purchasing, promoting sales, 

and business research and control. . . .” 29 C.F.R. § 541.205(b). That section was deleted in 2004.

 

9

 The Department of Labor’s comments suggest that the factors set forth in the former § 541.205(b) are more 

relevant to the third prong of the administrative exemption analysis (i.e., whether the employee exercises “discretion 

and independent judgment”) rather than the second prong (“directly related to management or general business 

operations”). See Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside 

Sales and Computer Employees, 69 Fed. Reg. 22122-01 (Apr. 23, 2004) (stating that the factors in the current 

version of 29 C.F.R. § 541.202—which define the “discretion and independent judgment” requirement—were taken 

from regulations such as the former §541.205(b)). 

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 With that framework in mind, the Court turns to the case law the parties cite from other 

jurisdictions in which courts have applied the Regulations to employees performing job duties 

similar to Plaintiffs’ duties in this case. 

3. Case Law From Other Jurisdictions 

Although the parties cite several cases from other jurisdictions in support of their 

positions, only two of those cases—Davis v. J.P. Morgan Chase & Co., 587 F.3d 529 (2d Cir. 

2009) and Bollinger v. Residential Capital, LLC, 863 F. Supp. 2d 1041 (W.D. Wash. 2012)—

warrant in-depth analyses. In both Davis and Bollinger, the courts analyzed the job duties of 

underwriters who performed similar tasks as Plaintiffs. See Davis, 587 F.3d at 530–31; 

Bollinger, 863 F. Supp. 2d at 1043–44. Both the Davis and Bollinger courts concluded that the 

underwriters did not perform work directly related to management policies or general business 

operations, such that they did not qualify for the administrative exemption. Davis, 587 F.3d at 

537; Bollinger, 863 F. Supp. 2d at 1048–49. 

Because neither Davis nor Bollinger is binding on this Court, their holdings only impact 

this analysis if their analyses comport with Sixth Circuit precedent and the applicable 

Regulations, and the job duties analyzed therein are analogous to Plaintiffs’ job duties in this 

case. Ultimately, because the Court finds that the Davis and Bollinger holdings rest on a flawed 

premise that is inconsistent with Sixth Circuit case law, it finds Davis and Bollinger to be of 

minimal persuasive value. 

 Central to the Davis and Bollinger decisions is the proposition that there exists an 

important distinction “between employees directly producing the good or service that is the 

primary output of a business and employees performing general administrative work applicable 

to the running of any business.” Davis, 587 F.3d at 535 (emphasis added); accord Bollinger, 863 

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F. Supp. 2d at 1048 (characterizing § 541.201(b) as “distinguish[ing] between work that any 

employer needs performed—such as accounting, human resources, and regulatory compliance—

and work that is particular to an employer’s industry”). In other words, “[a]n employee whose 

job is to evaluate credit who works in the credit industry is more likely to perform a production 

job,” whereas employees “who evaluate and extend credit on behalf of a company that is not in 

the credit industry . . . are generally considered administrative.” Davis, 587 F.3d at 536–37. The 

Davis court concluded that, because underwriters are “directly engaged in creating the ‘goods’—

loans and other financial services—produced and sold by Chase” and do not perform a function 

that is required to run “any business,” they were not administrative employees. Id. at 535; 

accord Bollinger, 863 F. Supp. 2d at 1048 (concluding that underwriters were not administrative 

employees because “[t]he work [the plaintiffs] did—collecting customers’ financial data and 

measuring that data against [the employer’s] lending guidelines—was necessary because 

Defendants provided mortgages, not because Defendants were in business generally”). 

 This purported rule of law, although attractive in its simplicity, does not square with 

Sixth Circuit case law and the Regulations. It may be the case that jobs required to run “any 

business,” such as human resources and accounting, are more likely to be “directly related to 

management or general business operations” under 29 C.F.R. § 541.201(b). In that sense, it is 

true that “context matters.” Davis, 587 F.3d at 536; accord Schaefer, 358 F.3d at 402 

(examining the context of the plaintiff’s job duties in relation to the employer’s business). But it 

is not the case that job duties that are “particular to the employer’s industry” necessarily are 

excluded from the administrative exemption. If that were the rule, then the Sixth Circuit’s 

holdings in Renfro (administrative exemption applied to an electric company’s employees who, 

inter alia, prepared work packages from specific job orders that the company’s craft workers 

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could use to perform work in the field) and Foster (exemption applied to insurance company’s 

employees who investigated suspicious insurance claims) would make no sense. 

Such a rule also would not square with the administrative exemption examples in 29 

C.F.R. § 541.203. That section states that insurance claims adjusters who perform work such as 

interviewing insureds, inspecting property damage, preparing damage estimates, and determining 

liability and total value of a claim—which clearly are duties specific to the insurance industry—

generally meet the duties requirements for the administrative exemption. 29 C.F.R. § 

541.203(a). Similarly, employees in the financial services industry who “collect[] and analyz[e] 

information regarding the customer’s income, assets, investments or debts; determin[e] which 

financial products best meet the customer’s needs and financial circumstances; advis[e] the 

customer regarding the advantages and disadvantages of different financial products; and 

market[], servic[e] or promot[e] the employer’s financial products”—which clearly are job duties 

particular to the finance industry—generally qualify the administrative exemption.10 

 Because the Bollinger court appeared to rely almost exclusively on this distinction 

between “work that any employer needs performed . . . and work that is particular to an 

employer’s industry” in concluding that underwriters are not administrative employees, 863 F. 

Supp. 2d at 1048, the Court declines to follow its holding. The Court similarly declines to adopt 

the corresponding portion of the Davis court’s holding. The Davis court, however, also went a 

step further and concluded that the underwriter position could not be administrative because it 

 

10 The Bollinger court attempted to harmonize its holding with the financial services example in 29 C.F.R. § 

541.203(b) by re-characterizing the job duties listed therein as providing “analysis of [a business’] particular needs 

and advice on the best products or services to meet those needs.” Id. at 1049. The court concluded: “[a]lthough the 

advice received will reflect individual circumstances, the need for the advice is independent of those goals” and 

therefore not particular to the finance industry. 863 F. Supp. 2d at 1049. But the same could be said about any job 

duty characterized in its most abstract terms. Shipping radioactive waste for an electric company could, for 

example, be characterized as disposing of waste generated by production of the business’ products, which is a 

service every business needs. Applying the Bollinger analysis, that job would qualify as administrative, but the 

Sixth Circuit held the opposite. See Schaefer, 358 F.3d at 403. The Bollinger court’s analysis therefore is not 

persuasive on this point. 

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qualified as production work under the administrative/production dichotomy. 587 F.3d at 535. 

Because the Court also finds this conclusion to be contrary to Sixth Circuit precedent, it finds 

Davis to be of minimal persuasive value. 

 In Davis, the court concluded that, because the underwriters’ job duties “concern[ed] the 

production of loans—the fundamental service provided by the bank,” they were production 

employees. 587 F.3d at 534. But, as stated above, the Sixth Circuit has defined the term 

“production” narrowly to include only those employees who actually create or sell the 

product/service the employer offers—not all employees whose job responsibilities are related to 

the production process. See, e.g., Foster, 710 F.3d at 645; Renfro, 370 F.3d at 517–18. The 

Davis court’s expansive definition of production therefore conflicts with the Sixth Circuit 

precedent discussed above.11

Importantly, in concluding that the underwriters in question were production employees, 

the Davis court characterized their primary duty as “sell[ing] loan products.” 587 F.3d at 534. 

This characterization highlights the fact that many employees performing loan-related duties—

including those in many of the cases Plaintiffs cite—play an active role in the process of 

“selling” loans to customers. See, e.g., Casas v. Conseco Fin. Corp., No. 00-1512, 2002 WL 

507059, at *1, 9 (D. Minn. Mar. 31, 2002) (concluding that loan originators who, inter alia, 

made telephone contact with potential customers and matched the customers’ needs with the 

company’s loan products were production employees); see also Opinion Letter, 2010 WL 

1822423 (Dep’t of Labor Mar. 24, 2010) (setting forth the Department of Labor Deputy 

 

11 The Davis court also appeared to employ an either-or analysis with respect to the production/ 

administrative dichotomy, see 587 F.3d at 531–32, which clearly conflicts with Sixth Circuit precedent. 

See Martin, 381 F.3d at 583. Moreover, the Davis court concluded that the underwriters were production 

employees at least in part because their job duties were “functional rather than conceptual,” 587 F.3d at 

535, but 29 C.F.R. § 541.201(b) states that work in “functional areas” is “directly related to management or 

general business operations” so as to qualify for the administrative exemption. 

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Administrator’s opinion that mortgage loan officers, who typically receive internal leads and 

contact potential customers regarding loan products, generally perform production work because 

their primary duty is making sales). When an employee is contacting customers, selling those 

customers on particular loan products, and collecting information from those customers, it makes 

sense to characterize him or her as a “production” employee because he or she is directly 

involved in selling the employer’s product to consumers. 

Here, however, Plaintiffs have no contact with the Bank’s customers. The process is split 

into two parts, with the loan originators and loan processors contacting and discussing options 

with potential customers, selling those customers on the appropriate loan package, and collecting 

all necessary information for the loan application. Only then does the loan application proceed 

to an HLU for review and approval. The HLUs’ job responsibilities in this case therefore are not 

related to sales/production in the same way as the job responsibilities discussed in Casas. 

Given that difference, and for the reasons set forth above, the Court does not find the 

Davis, Bollinger, or Casas decisions to be particularly instructive to the present analysis. The 

Court therefore proceeds to examine Plaintiffs’ job duties pursuant to the Sixth Circuit 

framework discussed above. 

4. Analysis 

Necessarily beginning this analysis with the administrative/production dichotomy, the 

Court first concludes that Plaintiffs are not “production” employees under the narrow definition 

employed by courts in this Circuit. Plaintiffs do not contend that they create or sell loan 

products. Instead, they argue that they are production employees simply because they are 

involved in the process of “producing” loans. But just as the planners in Renfro who took job 

orders and created work packages that the employer’s craft workers would use to perform the 

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work in the field—clearly a responsibility that is involved in the production process—were not 

production employees, neither are the underwriters here. See Renfro, 370 F.3d at 514, 517–18. 

Moreover, in some sense, Plaintiffs’ responsibilities can be characterized as the opposite 

of production, in that Plaintiffs can disapprove loan applications for customers who have already 

been “sold” on a particular loan product. Plaintiffs’ job responsibilities in that respect are 

analogous to a security officer in a retail store that sells age-restricted items. Although the 

security officer must verify the customer’s age in order for the sale to proceed, he or she is not 

engaged in “production” in the same way as the manufacturing employees who actually make the 

item and/or the retail employees who sell it to customers. The Court therefore concludes that 

Plaintiffs are not production employees. 

The more difficult question is whether Plaintiffs are administrative employees. Plaintiffs’ 

primary duties, as stated above, consist of reviewing loan application files to evaluate the 

creditworthiness of customers applying for home loans and determining whether the Bank will 

approve or disapprove the loan. Various aspects of these duties are analogous to various aspects 

of the “functional” job duties set forth in 29 C.F.R. § 541.201(b). For example, the fact that 

Plaintiffs can disapprove a potential loan agreement makes their duties analogous to a quality 

control employee who prevents a defective product from being sold or a legal/regulatory 

compliance professional who counsels against selling a certain product or using a certain 

marketing technique. See 29 C.F.R. § 541.201(b). In each example, the employees “service” the 

business (and therefore qualify for the administrative exemption under § 541.201(a)) by looking 

beyond short-term sales to protecting the company’s long-term interests. 

Similarly, the fact that Plaintiffs work with loan applications that already exist (rather 

than soliciting and working with the customer to create the loan application) makes their role 

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loosely analogous to that of an insurance claims adjuster who makes decisions on accounts that 

have already been sold to consumers. See 29 C.F.R. § 541.203(a) (listing insurance claims 

adjuster as an example of a position that qualifies for the administrative exemption). In that 

sense, both Plaintiffs and insurance claims adjusters provide a service that does not generate 

business for their employers, but that is necessary for their employers to do business. In other 

words, those employees do not perform “production” roles, but instead perform roles that are 

“ancillary” to the employer’s principal production activity. Cf. Renfro, 370 F.3d at 517–18. 

Regarding financial services employees in particular, the Regulations distinguish between 

“an employee whose primary duty is selling financial products” (who does not qualify for the 

administrative exemption), and one who collects and analyzes information regarding the 

customer’s income, asserts, investments or debts, determines which financial products best meet 

the customer’s needs and circumstances, and advises the customer regarding the advantages and 

disadvantages of different financial products (who does qualify for the administrative 

exemption). 29 C.F.R. § 541.203(a). Plaintiffs in this case are not directly analogous to either of 

these hypothetical employees. But because Plaintiffs have no contact with customers, their role 

is less analogous to the sales associate in the former example and more analogous to the nuanced 

role played by the employee in the latter example. Similar to that latter employee, Plaintiffs 

analyze information regarding a customer’s financial status, accept or reject loan packages based 

on the customer’s circumstances, and occasionally suggest alternative products that may be a 

better fit for both the Bank and the customer. The financial services example therefore provides 

further support for the Court’s conclusion that Plaintiffs perform administrative job duties. 

Plaintiffs’ remaining arguments in support of their position are not persuasive. For 

example, Plaintiffs note several times that they work in cubicles, that they are low-level 

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employees, and that the HLU position requires only 1–3 years of experience. But Plaintiffs 

provide no authority to suggest that those facts are even relevant to the present analysis. To the 

contrary, the focus of this analysis is on the type of work performed, not the level of 

responsibility or skill needed to perform the HLU position. Even the court in Davis—on which 

Plaintiffs so heavily rely—agrees with that conclusion. See Davis, 587 F.3d at 533 (finding it 

“irrelevant” that the plaintiff’s salary was “relatively low” or that he “worked in a cubicle”). 

Plaintiffs also argue that they are evaluated based on production, which makes them 

production employees. But, as Defendants point out, Plaintiffs are monitored based on how 

many loan files they “touch” in a particular day; not how many loans they approve. Stated 

differently, Plaintiffs are evaluated on their productivity, not how many loans they produce. 

Moreover, even if an evaluation scheme such as Defendants’ were relevant to the question of 

whether an employee performs a production role, it certainly is not dispositive: many of the 

occupations listed in 29 C.F.R. § 541.201(b) could be evaluated in a similar way (such as an 

auditor who is evaluated based on the number of files he or she audits per day), but those 

occupations still qualify as “directly related to management or general business operations” 

under § 541.200(a)(2). 

Plaintiffs also argue that HLUs are under strict supervision and are not free to disregard 

the Bank’s lending regulations. That argument, however, is relevant to the third prong of the 

exemption analysis—i.e., whether Plaintiffs exercise discretion and independent judgment—and 

not the second. Plaintiff’s argument that HLUs do not set the Bank’s risk appetite is similarly 

unavailing. Although it may be the case that the employees who set the Bank’s risk appetite are 

clearly administrative, it does not follow that the lower-level employees who implement those 

risk policies are not. And finally, Plaintiffs’ argument that HLUs play no role in determining the 

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future strategy or direction of the Bank’s business misses the mark, as many of the occupations 

listed in 29 C.F.R. § 541.201(b) play no role in establishing the future direction of the business 

(such as tax, insurance, and personnel management, for example) but still meet the duties 

requirement of § 541.200(a)(2). 

In short, having considered the Regulations, relevant case law, and the parties’ 

arguments, the Court concludes that Plaintiffs’ primary duties consist of the performance of 

office or non-manual work directly related to the management or general business operations of 

the Bank pursuant to 29 C.F.R. § 541.200(a)(2). Plaintiffs therefore qualify for the 

administrative exemption under the second prong of § 541.200(a)’s three-pronged test. The 

Court now proceeds to analyze whether Plaintiffs qualify under the third and final prong. 

c. “Exercise of Discretion and Independent Judgment With Respect to Matters of 

Significance” 

Pursuant to 29 C.F.R. § 541.200(a)(3), employees cannot qualify for the administrative 

exemption unless their primary duty “includes the exercise of discretion and independent 

judgment with respect to matters of significance.” 

1. Discretion and Independent Judgment 

“In general, the exercise of discretion and independent judgment involves the comparison 

and the evaluation of possible courses of conduct, and acting or making a decision after the 

various possibilities have been considered.” 29 C.F.R. § 541.202(a). A court must consider 

several factors when determining whether an employee exercises discretion and independent 

judgment, including: 

whether the employee has authority to formulate, affect, interpret, or implement 

management policies or operating practices; whether the employee carries out 

major assignments in conducting the operations of the business; whether the 

employee performs work that affects business operations to a substantial degree, 

even if the employee’s assignments are related to operation of a particular 

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segment of the business; whether the employee has authority to commit the 

employer in matters that have significant financial impact; whether the employee 

has authority to waive or deviate from established policies and procedures without 

prior approval; whether the employee has authority to negotiate and bind the 

company on significant matters; whether the employee provides consultation or 

expert advice to management; whether the employee is involved in planning longor short-term business objectives; whether the employee investigates and resolves 

matters of significance on behalf of management; and whether the employee 

represents the company in handling complaints, arbitrating disputes or resolving 

grievances. 

29 C.F.R. § 541.202(b). 

Other factors are not determinative of whether an employee exercises discretion and 

independent judgment pursuant to § 541.200(a)(3). “The fact that many employees perform 

identical work or work of the same relative importance,” for example, does not mean that those 

employees are not exercising discretion or independent judgment. Id. § 541.202(d). Similarly, 

the fact that an employee’s decisions or recommendations are “reviewed at a higher level” does 

not remove the employee from the scope of the administrative exemption. Id. § 541.202(c). 

Because Plaintiffs are required to apply the Bank’s lending criteria in making loan 

decisions, the Regulations’ comments regarding the use of guidelines and manuals are 

particularly relevant to this dispute. Pursuant to § 541.202(e), “[t]he exercise of discretion and 

independent judgment must be more than the use of skill in applying well-established techniques, 

procedures or specific standards described in manuals or other sources.” Id. § 541.202(e); see 

also Ale v. Tenn. Valley Auth., 269 F.3d 680, 687–688 (6th Cir. 2001) (affirming the lower 

court’s finding that employees did not exercise discretion or independent judgment when they 

followed strict procedures and protocols that controlled nearly everything they did). 

An employer’s use of manuals and guidelines does not, however, preclude exemption. 

Id. § 541.704. “To determine whether an employee, constrained by guidelines and procedures, 

actually exercises any discretion or independent judgment . . . [a court must] consider whether 

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those guidelines and procedures contemplate independent judgment calls or allow for 

deviations.” Renfro v. Ind. Mich. Power Co., 497 F.3d 573, 577 (6th Cir. 2007) (hereinafter 

“Renfro II”) (citing Schaefer, 358 F.3d at 404). Employees in heavily-regulated industries 

therefore can qualify for the administrative exemption if they exercise discretion and 

independent judgment within the confines of those regulations. See, e.g., Schaefer, 358 F.3d at 

404 (examining whether the employee, although “constrained by regulations, actually exercises 

discretion and independent judgment”); Henry v. Quicken Loans, Inc., 698 F.3d 897, 901 (6th 

Cir. 2012) (“That [the employer] used various methods to channel the [employee’s] discretion 

‘does not eliminate the existence of that discretion.’ ” (citing Renfro II, 497 F.3d at 577)). 

Notwithstanding that fact, “employees who simply apply well-established techniques or 

procedures described in manuals or other sources within closely prescribed limits to determine 

the correct response to an inquiry or set of circumstances” do not exercise discretion and 

independent judgment within the meaning of § 541.200(a)(3). 29 C.F.R. § 541.704 (emphasis 

added). This provision can, however, be somewhat misleading. On some level, all employees 

are trying to make “correct” decisions, in the sense that they do not want to make incorrect 

decisions. Insurance claims adjusters, for example, undoubtedly want to make the “correct” 

decision with regard to whether the company should pay a specific claim, but still exercise 

discretion and independent judgment within the meaning of § 541.200(a)(3). See id. § 

541.203(a) (listing insurance claims adjuster as a position that qualifies for the administrative 

exemption). The same can be said of financial advisors, who undoubtedly want to recommend 

the “correct” products and services to fit a customer’s needs, but still qualify for the 

administrative exemption. See id. § 541.203(b). 

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As these examples show, only when the “correct response” is objective and capable of 

verification does the language in § 541.704 make any sense. If there can be more than one 

“correct response,” or if it is impossible to determine the “correct response” at the time the 

employee must make a decision, then the language in § 541.704 provides little guidance. See id.; 

see also Foster v. Nationwide Mut. Ins. Co., No. 2:08-CV-020, 2012 WL 407442, at *26 (S.D. 

Ohio Jan. 5, 2012), aff’d, 710 F.3d 640 (6th Cir. 2013) (holding that special investigators for an 

insurance company exercised discretion and independent judgment because their jobs entailed 

searching for truth, which “is not an entirely objective concept”); Renfro II, 497 F.3d at 577 

(finding that technical writers at an electric company exercised discretion and independent 

judgment because, inter alia, “two different writers may solve the same problem two different 

ways, even though both solutions are equally effective”). 

2. Matters of Significance 

“The term ‘matters of significance’ refers to the level of importance or consequence of 

the work performed.” 29 C.F.R. § 541.202(a). Courts in this circuit have interpreted the term 

consistently with its common-sense meaning. See, e.g., Foster, 2012 WL 407442, at *26 

(holding that an insurance company’s decision to pay or deny insurance claims involved a matter 

of significance because “[p]aying insurance claims is central to Nationwide’s business, and 

payment of fraudulent claims would threaten to make the company less competitive in its 

industry”). Consistently, courts in other jurisdictions have found that employees with authority 

to financially bind their employers make “significant” decisions within the meaning of 

§ 541.200(a)(3). See, e.g., Robinson-Smith v. Gov’t Emps. Ins. Co., 590 F.3d 886, 895 (D.C. Cir. 

2010) (holding that an insurance claims adjuster made choices “with respect to matters of 

significance” because he could bind his employer up to $15,000). 

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3. Analysis 

Applying the above-cited authority, the Court concludes that Plaintiffs’ primary duties 

include the exercise of discretion and independent judgment with respect to matters of 

significance. Defendants have met their burden in demonstrating that Plaintiffs qualify for the 

administrative exemption under the third and final prong of § 541.200(a). 

Before analyzing the factors set forth in 29 C.F.R. § 541.202(b), the Court highlights one 

important fact that undercuts Plaintiffs’ arguments on this issue. It is undisputed that the Bank’s 

HLUs use underwriting software programs that run numbers from the customer’s loan 

application, produce calculations, and recommend whether the Bank should approve the loan. If, 

as Plaintiffs suggest, an HLU’s job is to plug numbers and facts into an established formula to 

come up with the correct loan decision, his or her job would begin and end with those software 

programs. But an HLU’s job does not end there. Instead, he or she must then review the 

software recommendation and determine whether to accept or override it, meaning that he or she 

must decide whether additional materials are necessary before the Bank can make a loan 

decision, whether to place stipulations on the application, whether to make an exception based on 

factors such as the customer’s history with the Bank, whether a different loan product should be 

offered to the customer, and whether other factors (such as the customer’s age and 

circumstances) raise concerns that would cause the Bank to question a loan it otherwise would 

have approved. The fact that the Bank even needs human underwriters—in addition to its 

software programs—suggests that the decisions at issue are more than just mechanical 

calculations. In other words, it suggests that HLUs necessarily exercise discretion and judgment 

of which a software program is not capable. 

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Moving to the factors set forth in 29 C.F.R. § 541.202(b), Plaintiffs’ primary duties 

include the exercise of discretion and independent judgment in two important respects. First, 

Plaintiffs have “authority to commit the employer in matters that have significant financial 

impact.” 29 C.F.R. § 541.202(b). It is undisputed that Plaintiffs have the authority to approve or 

deny a loan application. Plaintiffs are authorized to approve loan applications valued between 

$250,000 and $1,000,000. Plaintiffs therefore have the authority to bind the Bank to significant 

financial commitments. 

Second and most importantly, although Plaintiffs’ authority is heavily tempered by the 

Bank’s lending criteria, Plaintiffs have the “authority to waive or deviate from [that criteria] 

without prior approval.” Id. Plaintiffs can, in certain circumstances, deviate from the Bank’s 

lending criteria by declining to approve a loan that meets that criteria and/or making exceptions 

in order to approve a loan that does not. 

Plaintiffs can, for example, decline to approve a loan that meets the Bank’s lending 

criteria unless and until the customer meets certain stipulations. Such stipulations are not 

automatically generated by loan software or required by any manual or guidelines. Rather, they 

are placed on a file after an HLU compares and evaluates possible courses of conduct (i.e., the 

risk of approving the loan without the stipulation, the chance that the customer will not meet the 

stipulation and the Bank will lose the loan, the benefits of approving the loan once the stipulation 

is satisfied) and decides that the stipulation represents the best course of action. As such, even if 

the Bank’s guidelines contemplate stipulations in certain circumstances, the process of attaching 

stipulations to a loan application meets the Regulations’ definition of exercising discretion and 

independent judgment. See 29 C.F.R. § 541.202(a) (“In general, the exercise of discretion and 

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independent judgment involves the comparison and the evaluation of possible courses of 

conduct, and acting or making a decision after the various possibilities have been considered.”) 

Plaintiffs also can decline to approve a loan that meets the Bank’s lending criteria if the 

loan seems suspicious, as in the case of an elderly individual attempting to trade in a two-year 

note for a thirty-year note. In such a case, the HLU might inquire further and end up not 

approving a loan that met the Bank’s lending criteria. That action also requires a comparison of 

different options to decide on an appropriate course of conduct, which, again, qualifies as 

exercising discretion and independent judgment. See id. 

Finally, Plaintiffs can approve a loan that does not meet the Bank’s lending criteria by 

making an exception or adjustment to that criteria. This too involves comparing different 

courses of conduct (i.e., whether it is in the Bank’s interest to approve a loan when the customer 

has a history with the Bank, even though the application is too risky for approval under the 

Bank’s lending criteria) in order to make a decision on a loan application. Even if the Bank’s 

policies contemplate exceptions and provide guidance with respect to the same, the HLU still 

must decide whether an exception is appropriate in each case. 

The fact that Plaintiffs can place stipulations on a file, flag suspicious loans without 

approving them, and make exceptions to the Bank’s lending criteria shows that the Bank’s 

“guidelines and procedures contemplate independent judgment calls or allow for deviations,” 

Renfro II, 497 F.3d at 577, which supports the Court’s conclusion that Plaintiffs meet the 

“discretion and independent judgment” requirement of 29 C.F.R. § 541.200(a)(3). Plaintiffs 

argue that, because HLUs are expected to make exceptions in appropriate circumstances, they 

“do not have a choice (i.e., the discretion) on whether to use an available exception.” (ECF No. 

71, at 18.) But that argument confuses authority with judgment. Plaintiffs have the authority to 

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make exceptions, and they are expected to exercise that authority where appropriate. But there is 

no special formula that dictates when an exception is appropriate. Instead, HLUs must use their 

judgment to determine whether to exercise their exception authority. 

This point highlights another problem with Plaintiffs’ argument. Plaintiffs argue that 

they were expected to apply their skills to reach the “right” loan decision, but, as stated above, 

that concept would only make sense if there were an objectively “right” answer on every loan 

application. But that is not the case: in the examples discussed above, there is no way to verify 

whether the “right” decision is to approve a loan with or without a stipulation, whether to 

approve an elderly customer’s application or question it further and risk losing the loan, or 

whether to make an exception for a repeat customer that would not otherwise qualify for the loan 

he or she is requesting. The fact that HLUs are given an opportunity to defend their decisions in 

response to internal and external audits only supports the Court’s conclusion that there is not 

necessarily one “right” course of action on every loan application.12

Plaintiffs’ additional arguments are equally unpersuasive. Plaintiffs again belittle their 

qualifications and suggest that the Bank would not vest discretion and independent judgment in 

employees with only a high school education and 1–3 years of underwriting experience. But the 

Court’s focus, as stated above, is on the type and nature of the work performed, not the 

qualifications required to perform that work. Plaintiffs also argue that HLUs are required to 

make decisions “objectively,” but the Bank’s policies state: “[l]ending personnel are expected to 

exercise their judgment regarding credit decisions objectively.” (ECF No. 65-2, at 13 (emphasis 

 

12 Plaintiffs assert that “the parties agree there is only one acceptable answer on a file,” (ECF No. 65, at 42 n.7), but 

cite deposition testimony in which Defendants stated: “The underwriter’s goal is to make the right loan decision . . . 

[t]he underwriter has a goal to find the right solution for the customer and the right answer for the customer for their 

borrowing need.” (Cline Depo., ECF No. 58, at 78:21–79:2.) This testimony parallels the Court’s earlier comments 

that insurance claims adjusters and financial advisors undoubtedly want to make the “right” decision but, because 

the “right” decision is not objectively verifiable, they still use discretion and independent judgment within the 

meaning of 29 C.F.R. § 541.200(a)(3). 

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added).) An HLU is not foreclosed from using his or her judgment simply because he or she 

must apply that judgment consistently across loan applications. 

In short, despite the fact that HLUs operate in a heavily-regulated environment, their 

primary duties still include the exercise of discretion and independent judgment within the 

confines of those regulations. That discretion and independent judgment clearly relates to 

“matters of significance” within the meaning of 29 C.F.R. § 541.200(a)(3). Plaintiffs have 

authority to approve loan applications valued between $250,000 and $1,000,000—meaning that 

their everyday responsibilities consist of binding the Bank to significant financial commitments. 

Plaintiffs’ ability to disapprove loans also has a significant impact on the customer, which affects 

the Bank’s customer service and long-term business interests. 

Plaintiffs’ argument on this point is without merit. Section 541.202(f) of the Regulations, 

which states that “[a]n employee does not exercise discretion and independent judgment with 

respect to matters of significance merely because the employer will experience financial losses if 

the employee fails to perform the job properly,” does not apply in this case because Plaintiffs’ 

decisions have a significant impact on the Bank regardless of whether or not they are performing 

their job properly. 29 C.F.R. § 541.202(f). The facts that Plaintiffs do not determine the Bank’s 

risk policies, do not develop loan products, and are not evaluated based on default rates are 

irrelevant to the conclusion that Plaintiffs’ loan decisions have a significant impact on the Bank. 

For those reasons, the Court concludes that Defendants have met their burden in 

demonstrating that Plaintiffs qualify for the administrative exemption under the third and final 

prong of 29 C.F.R. § 541.200(a). Accordingly, Plaintiffs are “bona fide administrative 

employees” that are exempt from the overtime requirements of 29 U.S.C. § 207(a)(1). See 29 

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U.S.C. § 213(a)(1). The Court therefore GRANTS Defendants’ motion for summary judgment 

with respect to Plaintiffs’ FLSA claim (Count One). 

The Court need not consider the parties’ remaining arguments regarding Plaintiffs’ claim 

for straight time wages, whether the Bank acted in good faith, and whether the Bank willfully 

violated the FLSA. The Court also need not consider Defendants’ alternative request that the 

Court decertify the FLSA collective action class. 

C. State Law Claims (Counts Two, Three, and Four) 

In addition to their FLSA claim, Plaintiffs Lutz and Becker also bring a claim for 

overtime wages under Ohio Revised Code § 4111.03, which is the state-law equivalent of the 

FLSA’s overtime provisions. Pursuant to § 4111.03, employees are exempt from Ohio’s 

overtime requirements to the same extent they are exempt from the FLSA’s overtime 

requirements. Ohio Rev. Code § 4111.03(A). Accordingly, having found that Plaintiffs Lutz 

and Becker are exempt from the FLSA’s overtime requirements, the Court concludes that they 

also are exempt from Ohio’s overtime requirements. The Court therefore GRANTS Defendants’ 

motion for summary judgment with respect to Count Two. Because Plaintiffs Lutz and Becker’s 

claim for willful withholding of wages pursuant to Ohio Revised Code § 4113.15 is dependent 

upon their § 4111.03 claim, the Court similarly GRANTS Defendants’ motion for summary 

judgment with respect to Count Three. 

In their fourth claim for relief, Plaintiffs Lutz and Becker allege that Defendants are 

liable for failing to keep accurate wage and hour records of their hours worked. Presumably, this 

claim also is dependent upon Plaintiffs’ arguments that they were not paid overtime wages to 

which they were entitled. Because the Court finds that Plaintiffs were not entitled to overtime 

wages, it GRANTS Defendants’ motion for summary judgment with respect to Count Four. 

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Having found that Defendants are entitled to summary judgment on Plaintiffs’ state law 

claims, the Court DENIES AS MOOT Plaintiffs’ motion to certify an Ohio state-law class 

pursuant to Federal Rule of Civil Procedure 23. (ECF No. 63.) 

III. CONCLUSION 

For the foregoing reasons, the Court takes the following actions with respect to the three 

pending motions in this case: 

 GRANTS Defendants’ motion for summary judgment on all claims (ECF No. 

62); 

 DENIES Plaintiffs’ cross-motion for summary judgment on all claims (ECF No. 

65); and 

 DENIES AS MOOT Plaintiffs’ motion to certify a state-law class pursuant to 

Federal Rule of Civil Procedure 23 (ECF No. 63). 

The Clerk is DIRECTED to enter judgment accordingly and remove this case from the 

docket records of the United States District Court for the Southern District of Ohio, Eastern 

Division. 

 IT IS SO ORDERED. 

 /s/ Gregory L. Frost 

 GREGORY L. FROST 

 UNITED STATES DISTRICT JUDGE 

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