Court Opinion

ID: 3001288
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:14:59.44203+00
Date Added: 2024-06-11T15:03:07.043605
License: Public Domain

In the
 United States Court of Appeals
              For the Seventh Circuit
                      ____________

No. 06-3195
PAULA M. ROE-MIDGETT, Individually
and as Collective Action and
Class Action Representative, and
PAUL DECKER, Individually and
as Collective Action and
Class Action Representative,
                                 Plaintiffs-Appellants,
                           v.

CC SERVICES, INCORPORATED,
                                       Defendant-Appellee.
                      ____________
         Appeal from the United States District Court
              for the Southern District of Illinois.
       No. 04 C 4051—David R. Herndon, Chief Judge.
                      ____________
   ARGUED JANUARY 5, 2007—DECIDED JANUARY 4, 2008
                    ____________

 Before FLAUM, MANION, and SYKES, Circuit Judges.
  SYKES, Circuit Judge. Plaintiffs Paula Roe-Midgett
and Paul Decker sued their employer CC Services, Inc.
(“CCS”) for overtime wages under the Fair Labor Stan-
dards Act (“FLSA”), 29 U.S.C. § 207(a)(1). CCS contracts
with insurance companies to provide claims processing
services for auto, home, commercial, and farm policies.
Roe-Midgett and Decker were employed as claims ad-
justers at different levels of CCS’s claims-processing
2                                             No. 06-3195

hierarchy. Suing individually and on behalf of four
classes of claims adjusters, the plaintiffs contended that
CCS improperly classified them as administrative em-
ployees exempt from FLSA overtime requirements under
29 U.S.C. § 213(a)(1).
  Applying the Department of Labor’s so-called “short
test” for determining whether employees fall within the
FLSA’s administrative exemption, the district court
concluded that the primary duties of all four claims-
processing positions involved matters (1) “directly re-
lated to management policies or general business opera-
tions” and (2) “requiring the exercise of discretion and
independent judgment.” 29 C.F.R. § 541.214 (2003).
Accordingly, the court held the employees were exempt
from the overtime pay requirements of the FLSA and
granted summary judgment for CCS.
   On appeal the plaintiffs develop no substantive chal-
lenge to the district court’s ruling as it relates to three
of the four classes of employees: CCS’s Field Claims
Representative II, Field Claims Representative III, and
Property Specialist positions. As to these employees, they
argue only that material issues of fact preclude sum-
mary judgment for CCS. But they failed to identify
any real factual dispute specific to these employees.
Regarding the final group of employees—those occupying
the position of Material Damage Appraiser II—the plain-
tiffs contend that the duties of this position do not di-
rectly relate to CCS’s management policies or general
business operations and do not require the exercise of
discretion and independent judgment. We disagree.
  Material Damage Appraisers provide claims adjust-
ment services for CCS’s insurance company clients up to
a $12,000 limit of claims settlement authority and repre-
sent the “face” of CCS to the countless claimants with
whom they interact. They spend much of their time in the
No. 06-3195                                                3

field without direct supervision. They conduct on-site
investigations of first- and third-party automobile insur-
ance claims; interview claimants, witnesses, and law
enforcement personnel; estimate loss; determine whether
parts should be repaired or replaced; negotiate with
mechanics and body shops and draft final repair estimates;
and settle claims up to the limit of their $12,000 settle-
ment authority. These duties directly relate to CCS’s
business operations and reflect a sufficient degree of
discretion and independent judgment to qualify for the
FLSA’s administrative exemption. Summary judgment
was properly entered for CCS on all four classes of em-
ployees.

                     I. Background
  CCS is engaged in the business of processing insurance
claims for auto, home, commercial, and farm insurers.
Headquartered in Bloomington, Illinois, and administered
through 37 field offices, CCS’s Claims Division settled
roughly $600 million in claims in 2004. The claims-process-
ing staff in each field office typically consists of Property
Specialists, Field Claims Representatives, and Material
Damage Appraisers (“MDA”), as well as other positions
not relevant here.
  MDAs draw an annual salary of $36,952 to $55,427 and
primarily handle automobile claims. They do not make
coverage or liability determinations, which are typically
made by Field Claims Representatives or other claims
agents. MDAs are responsible for investigating auto
accident damage, making repair or replacement determi-
nations, drafting estimates, and settling claims of up to
$12,000 where liability has been established and coverage
4                                              No. 06-3195

approved.1 MDAs spend much of their time in the field
without direct supervision. Moreover, because 70% of
appraisals assigned to MDAs come from the home office
and not the local field office, the field office supervisors
do not exert much direct daily control over MDAs.
   Investigating accident damage entails a physical inspec-
tion of the vehicle to ensure the actual damage and its
cause correspond to the claimed damage and cause. The
cause of the accident often dictates the applicable policy
(i.e., comprehensive or collision) and deductible. MDAs
may also interview claimants, witnesses, and where
relevant, police personnel. If an MDA notes incon-
sistencies or otherwise suspects fraud, he relays his
observations to a CCS superior in charge of final liabil-
ity and coverage determinations.
   After documenting and investigating vehicle damage
on a given claim, the MDA prepares an estimate. The
first step in this process is determining if the vehicle is
irreparably damaged (a “structural total loss” in industry
parlance) or if the cost of repair exceeds the vehicle’s
value (an “economic total loss”). The latter calculation
is performed by inputting the vehicle’s identification
number and damage estimate into a software program
that “red flags” potential economic losses. If an MDA
suspects a structural total loss, he will relay that sus-
picion along with photos of the damage to a claims repre-
sentative with final say as to whether the vehicle is a
structural total loss.
 If the vehicle is not a total loss, the MDA must decide
which parts to repair and which to replace. For repaired

1
  The average MDA payout on auto damage claims is far less
than the $12,000 limit. From January to November 2002, for
example, the average monthly payout ranged from $1750 to
$2400.
No. 06-3195                                              5

parts, the MDA estimates the total labor costs based in
part on his estimation of the man hours needed to com-
plete the repair. In some instances body shops disagree
with the MDA’s projection, and the MDA negotiates for
an adjusted hours estimate. MDAs might also adjust a
repair estimate to account for “betterment,” a concept
intended to reflect the fact that parts that were in good
repair cost more to restore to their original preaccident
condition than parts already in disrepair at the time of
the accident.
  MDAs also estimate the cost of replacing any parts
they deem beyond repair. They input a description of the
part into a software program, which then generates an
estimate based on labor costs and part price. In estimating
the price for the part, the software detects the avail-
ability of used parts and automatically factors in that
discount. The MDA may override the software and allow
for new parts, but only after documenting the reasons
for his deviation on a file summary sheet; all other devia-
tions from CCS’s adjusting guidelines must similarly
be memorialized. “Betterment” adjustments may also
affect replacement part estimates.
  After projecting the repair and replacement costs,
MDAs draft a final damage estimate. While they are
responsible for explaining the estimate to the claimant
and answering any questions, MDAs refer dissatisfied
claimants to a CCS adjuster with authority to deter-
mine coverage and liability. If, however, the claimant is
satisfied with the estimate and the claims representative
has already determined liability, MDAs may settle claims
of up to their $12,000 limit of authority. Claims represen-
tatives need not formally approve the actual amount of
settlement or underlying estimate, though they informally
review an MDA’s work for errors. CCS auditors also
periodically audit MDA estimates to ensure compliance
with the adjusting guidelines and to gauge each MDA’s
6                                               No. 06-3195

“leakage,” that is, the percentage of total claims paid
in error.
  In addition to MDAs, CCS’s field offices are also
staffed with Field Claims Representatives II and III and
Property Specialists. Employees with these titles gen-
erally receive a higher salary than MDAs and are autho-
rized to make final coverage and liability determina-
tions and settle higher-value and more complicated
claims. For reasons we will explain, further discussion of
the day-to-day duties of these positions is unnecessary
for purposes of this appeal.
  CCS classified its MDAs, Field Claims Representatives,
and Property Specialists as “administrative” employees
exempt from overtime wages otherwise mandated by
the FLSA. Two CCS employees2 took issue with the
classification and brought this “opt-in” collective action
under the FLSA. See 29 U.S.C. § 216(b). CCS moved for
summary judgment with respect to all four positions; the
plaintiffs cross-moved for summary judgment as to the
MDA position. The district court granted CCS’s motion
and the plaintiffs appealed.

                       II. Analysis
  We review de novo the district court’s grant of sum-
mary judgment in favor of CCS. Allen v. City of Chicago,
351 F.3d 306, 311 (7th Cir. 2003). We will affirm if,
construing the evidence and all reasonable inferences in
a light most favorable to the plaintiffs, there are no
genuine issues of material fact in dispute and CCS is
entitled to judgment as a matter of law. Id.; FED. R. CIV. P.

2
  Roe-Midgett was an MDA; Decker was a Field Claims Repre-
sentative and Property Specialist.
No. 06-3195                                                7

56(c). The burden is on CCS to establish that an em-
ployee falls within the FLSA’s administrative exemption.
Corning Glass Works v. Brennan, 417 U.S. 188, 196-97
(1974). Determining the duties encompassed by an em-
ployee’s position is a question of fact; determining the
appropriate FLSA classification is a question of law. Icicle
Seafoods, Inc. v. Worthington, 475 U.S. 709, 714 (1986).
   The FLSA requires employers to pay overtime wages
(i.e., one and one-half times the regular rate) for any hours
worked in excess of 40 per week. 29 U.S.C. § 207(a)(1)
(2000). Exempt from the overtime requirements, how-
ever, are workers “employed in a bona fide . . .
administrative . . . capacity.” 29 U.S.C. § 213(a)(1). Con-
gress has charged the Secretary of Labor with issuing
regulations defining and delimiting the term “bona fide
administrative capacity.” Id. In 1975 the Secretary
issued the so-called “short test” for determining whether
salaried employees engaged in nonmanual work (a descrip-
tion the plaintiffs concede applies to them) are em-
ployed in an administrative capacity. 29 C.F.R. § 541.214
(2003) (all regulatory citations will be to the 2003 Code
of Federal Regulations unless otherwise noted). At the
heart of this appeal are the short test’s two “duties”
requirements, that is, that the employee’s primary duties
must (1) directly relate “to management policies or gen-
eral business operations of the employer or the em-
ployer’s customers” and (2) “include[ ] work requiring
the exercise of discretion and independent judgment.” Id.;
Demos v. City of Indianapolis, 302 F.3d 698, 701 (7th Cir.
2002). An employee’s title is not controlling; courts in-
stead must engage in a case-by-case analysis of the em-
ployee’s duties and responsibilities. 29 C.F.R.
§ 541.201(b)(1).
  In 2004 the Secretary issued a comprehensive set of
new regulations addressing the scope of the overtime
8                                               No. 06-3195

exemptions. 69 Fed. Reg. 22122, 22260 (Apr. 23, 2004)
(codified at 29 C.F.R. § 541.200). The regulations re-
placed the short test and the longer test at sec-
tion 541.2(a)-(e) with a “general rule” for determining
whether an employee works in an administrative
capacity. Id. at 22139. The general rule, however, merely
restates the short test’s two “duties” requirements. Id.;
29 C.F.R. § 541.200(a)(2)-(3) (2006). Indeed, the only
differences between the short test and the new “general
rule” are the salary requirement (at least $250 per
week under the old rule versus $455 per week under the
new rule) and the additional explanation that an ad-
ministrative employee must exercise discretion or inde-
pendent judgment “with respect to matters of signifi-
cance.” 29 C.F.R. § 541.200(a)(1), (3) (2006). While that
qualifying phrase was not explicitly part of the old test,
it was built into the old rule’s definition of “discretion
and independent judgment” found elsewhere in the
applicable regulations. See 69 Fed. Reg at 22143. In other
words, the new “general rule” is essentially a simplified
restatement of the old “short test.”
  The 2004 regulations also list examples of jobs that
generally satisfy the “duties requirements” for admini-
strative employees. 29 C.F.R. § 541.203 (2006). Included
in that list are “insurance claims adjusters . . . , if their
duties include activities such as interviewing insureds,
witnesses, and physicians; inspecting property damage;
reviewing factual information to prepare damage esti-
mates; evaluating and making recommendations re-
garding coverage of claims; determining liability
and total value of a claim; negotiating settlements; and
making recommendations regarding litigation.” Id.
§ 541.203(a).
  Because the 2004 regulations took effect after the
plaintiffs brought this action, the old short test still
determines whether they fall within the administrative
No. 06-3195                                               9

exemption. See Kennedy v. Commonwealth Edison Co.,
410 F.3d 365, 369 (7th Cir. 2005) (explaining that the
2004 regulations do not apply retroactively). But the
new regulations are nonetheless informative on the
issues before us in this appeal. The Secretary of Labor
has characterized the promulgation of the new rules as
an effort to “consolidate and streamline” the dense and
unwieldy regulatory text of the old regulations. 69 Fed.
Reg. at 22126. As we have noted, the 2004 regulations
did not substantively alter the old short test; to the
contrary, the Secretary undertook the regulatory revi-
sion to “streamline[ ] the existing regulations by adopt-
ing a single standard duties test for each exemption
category, rather than the existing ‘long’ and ‘short’ duties
test[ ] structure.” Id. The Secretary also described section
541.203, which lists examples of jobs that would be
deemed “administrative” and therefore exempt from
overtime pay, as “consistent with” the old regulations
and case law. Id. at 22144; see also In re Farmers Ins.
Exch., 481 F.3d 1119, 1128 (9th Cir. 2007) (“[Section]
541.203 does not represent a change in the law.”);
Robinson-Smith v. GEICO, 323 F. Supp. 2d 12, 26 (D.D.C.
2004) (same).

A. The MDA Position
  1. The “Directly Related” Requirement
   For MDAs to fall within the administrative exemption,
CCS must first establish that their primary duties con-
sist of “work directly related to management policies or
general business operations of the employer or the em-
ployer’s customers.” 29 C.F.R. § 541.214. This require-
ment encompasses “those types of activities relating to
the administrative operations of a business as distin-
guished from ‘production’ or, in a retail or service estab-
lishment, ‘sales’ work.” Id. § 541.205(a). “The administra-
10                                             No. 06-3195

tive operations of the business include the work per-
formed by so-called white-collar employees engaged in
‘servicing’ a business as, for example, advising the man-
agement, planning, negotiating, representing the company,
purchasing, promoting sales, and business research and
control.” Id. § 541.205(b). The “directly related” require-
ment also “limits the [administrative] exemption to
persons who perform work of substantial importance to
the management or operation of the business of his em-
ployer or his employer’s customers.” Id. § 541.205(a).
Accordingly, the “directly related” component of the short
test requires that the employee’s duties: (1) involve the
administrative operations of the business, as distinct
from production or sales work; and (2) be “of substantial
importance” to the business or its customers.
  CCS is in the business of processing claims brought by
policyholders and other claimants against the insurance
policies of its insurance company clients. MDAs handle
60% of all claims processed by CCS. A large percentage of
those claims involve auto damage totaling less than
$10,000, which MDAs investigate, adjust, and settle
with only minimal oversight. In so doing, MDAs are
required to analyze “data and draw[ ] conclusions which
are important to the determination of . . . [CCS’s] policy.”
29 C.F.R. § 541.205(c)(3). Consequently, MDAs play a
significant role in the claims-adjusting service CCS
provides to its insurance-carrier clients. MDAs are at the
front lines of CCS’s auto claims adjusting operation; they
spend most of their time in the field and represent the
“face” of CCS to the claimants and mechanics with whom
they interact. See id. § 541.205(b). Investigating, estimat-
ing, and ultimately settling auto damage claims is obvi-
ously “work of substantial importance” to CCS’s busi-
ness operations and is the core service it provides to
No. 06-3195                                                   11

its customers.3 Id. § 541.205(a). Indeed, the plaintiffs
have not mounted a serious challenge to CCS’s claim that
an MDA’s duties are of “substantial importance” to its
business. As such, they have essentially conceded the
point. See United States v. Duran, 407 F.3d 828, 844 n.7
(7th Cir. 2005).
  The plaintiffs do argue, however, that the duties of
an MDA are not properly characterized as “administra-
tive” for purposes of the first aspect of the “directly re-
lated” requirement. They contend MDAs are the post-
industrial equivalent of production workers and thus are
not involved in CCS’s administrative operations. The
plaintiffs are correct that the “directly related” test seeks
to distinguish exempt administrative work from nonex-
empt production or sales work. 29 C.F.R. § 205(a); Ken-
nedy, 410 F.3d at 372. But their attempt to cast MDAs
as service-industry “production” workers founders for
two reasons.
  First, the plaintiffs make too much of the fact that CCS
does not actually underwrite or sell insurance policies. The
gist of the plaintiffs’ argument is that CCS “produces”
claims-processing services (though not the underlying
policies) and therefore MDAs are essentially responsible
for “producing” CCS’s “product.” This argument hinges
on a distinction between in-house claims processing by
insurance companies, which the plaintiffs view as ancil-

3
  This is not to say all white-collar employees in service indus-
tries necessarily perform “work of substantial importance”
sufficient to meet the “directly related” test. The regulations
make clear that “bookkeepers, secretaries, and clerks of various
kinds” do not generally perform such work because “routine
clerical work” is not of substantial importance to the em-
ployer’s business operations. 29 C.F.R. § 541.205(c)(1). But
MDAs perform more than routine clerical work; they make
substantive decisions regarding the claims insurance com-
panies pay CCS to process.
12                                             No. 06-3195

lary to the “production” of the policies themselves, and
outsourced claims processing of the type performed by
CCS, which they interpret as a “product” unto itself. Under
the Department of Labor’s interpretive regulations,
however, this distinction is immaterial, as “administrative
operations of a business” may “be those of the employer
or the employer’s customers.” See 29 C.F.R. § 541.205(a),
(d) (emphasis added). CCS’s customers are insurance
companies in the business of selling policies, and em-
ployees who process claims against those policies are per-
forming an administrative function for CCS’s customers
(i.e., a task that administers the policies “produced” by
the insurers).
  This conclusion is reinforced by a Department of Labor
opinion letter involving a “claims specialist” who processed
claims “on behalf of a contracting insurance company.”
DOL Wage & Hour Div. Op. Ltr. FLSA2005-25, at 4 (Aug.
26, 2005). The administrative exemption turns on how
employees spend their day, not who signs their pay-
check. See 29 C.F.R. § 531.205(d). It would be strange to
conclude that a claims-processing employee at a third-
party service company like CCS is entitled to overtime
while his in-house counterpart at XYZ Insurance Co. is
not. Indeed, the 2004 regulations make it clear that
“insurance claims adjusters generally meet the duties
requirements for the administrative exemption, whether
they work for an insurance company or other type of
company.” 29 C.F.R. § 541.203(a) (2006) (emphasis added).
  Second, the so-called production/administrative dichot-
omy—a concept that has an industrial age genesis—is only
useful by analogy in the modern service-industry context.
“The typical example of the . . . dichotomy is a factory
setting where the ‘production’ employees work on the line
running machines, while the administrative employees
work in an office communicating with the customers and
doing paperwork.” Shaw v. Prentice Hall Computer Publ’g,
Inc., 151 F.3d 640, 644 (7th Cir. 1998). The analogy is not
No. 06-3195                                                 13

terribly useful here, particularly given that the 2004
regulations suggest a more traditional meaning of “produc-
tion.” The new regulations state that the “directly related”
test is met by employees who “assist[ ] with the running or
servicing of the business, as distinguished, for example,
from working on a manufacturing production line or
selling a product in a retail or service establishment.” 29
C.F.R. § 541.201(a) (2006). MDAs are obviously neither
working on a manufacturing line nor “producing” anything
in the literal sense. They are service providers, and the
service they provide is the administration of insurance
claims. This is the main business of CCS’s Claims Divi-
sion. See DOL Wage & Hour Div. Op. Ltr. FLSA2005-25,
at 4; see also Haywood v. N. Am. Van Lines, Inc., 121 F.3d
1066, 1072 (7th Cir. 1997) (employee who settled customer
complaints against moving company meets “directly
related” test because her employment activity was ancil-
lary to the employer’s moving business). We have no
difficulty concluding that the duties of MDAs “directly
relate” to CCS’s “administrative operations.”
  This conclusion is supported by an interpretive regula-
tion that lists “claim agents and adjusters” as examples
of positions that will generally satisfy the “directly related”
part of the short test. See 29 C.F.R. § 541.205(c)(5).
MDAs may lack some of the responsibilities traditionally
associated with claims adjusting—they do not, for exam-
ple, make liability and coverage determinations, see id.
§ 541.203(a) (2006)—but inspecting, appraising, and
settling property damage claims are core adjuster func-
tions. See id.

  2. The “Discretion and Independent Judgment”
     Requirement
 The undisputed evidence also leads us to conclude that
MDAs satisfy the short test’s second requirement—the
14                                            No. 06-3195

“exercise of discretion and independent judgment.”
29 C.F.R. § 541.214(a). The old regulations devote pages
to defining this phrase. They first explain that it in-
volves “the comparison and the evaluation of possible
courses of conduct and acting or making a decision after
the various possibilities have been considered.” Id.
§ 541.207(a). The phrase also “implies that the person
has the authority or power to make an independent
choice, free from immediate direction or supervision and
with respect to matters of significance.” Id. That choice
need not be final or otherwise immune from review; an
exercise of discretion or independent judgment may
“consist of recommendations for action rather than the
actual taking of action.” Id. § 541.207(e). The regulations
also caution against confusing true discretion and inde-
pendent judgment with the “use of skill in applying
techniques, procedures, or specific standards.” Id.
§ 541.207(b)-(c)(7). Employees who fit the latter descrip-
tion, whom the regulations describe as workers who
grade, classify, or otherwise determine whether specified
standards are met, are not exercising discretion or inde-
pendent judgment for purposes of the administrative
exemption. Id. § 541.207(c)(1)-(2). The plaintiffs argue
that this description applies to MDAs, whom they charac-
terize as mere “fact finders” whose responsibilities in-
volve only “the most basic component of the claims ad-
justing process.”
  Though the old regulations are silent as to whether
employees who adjust insurance claims exercise discretion
and independent judgment, the Department of Labor
(through agency opinion letters) and the circuits that have
confronted the question generally regard “claims ad-
justers” as exercising sufficient discretion to trigger the
administrative exemption. DOL Wage & Hour Div. Op.
Ltr. FLSA2002-11, at 2 (Nov. 19, 2002) (“Wage and Hour
has long recognized that claims adjusters typically per-
form work that is administrative in nature.”); see In
No. 06-3195                                             15

re Farmers, 481 F.3d at 1119; Cheatham v. Allstate Ins.
Co., 465 F.3d 578, 585-86 (5th Cir. 2006); McAllister v.
Transamerica Occidental Life Ins. Co., 325 F.3d 997, 1001
(8th Cir. 2003). Codifying the Department’s position, the
new regulations explain that “insurance claims adjusters
generally meet the duties requirements for the admini-
strative exemption.” 29 C.F.R. § 541.203(a) (2006). Unlike
the claims adjusters in the opinion letters and cases we
have cited, however, MDAs do not themselves determine
coverage or liability. They also do not negotiate with the
claimant’s attorney or make litigation recommendations.
See id. We conclude these distinctions are not significant
enough to take the MDAs outside the scope of the ad-
ministrative exemption.
  In addition to performing the core duties of a claims
adjuster, MDAs routinely use their discretion and inde-
pendent judgment to make choices that impact damage
estimates, settlement, and other “matters of significance.”
29 C.F.R. § 541.207(a). When MDAs inspect a vehicle for
damage, they must exercise independent judgment to
verify whether the actual damage is consistent with the
claimed damage. In doing so, the MDA must evaluate
whether the damage is likely preexisting, inconsistent
with the alleged cause, or otherwise suspicious. The
MDA must also be on the lookout for fraud when inter-
viewing the claimant and any witnesses. These are
judgment calls with respect to matters of significance;
MDAs are using their knowledge and experience to
distinguish covered damage from fraudulent or preexist-
ing damage. While MDAs do not make final liability
decisions, their assessment of the damage and its cause
bear directly on the ultimate coverage determination.
  For example, at her deposition Roe-Midgett testified that
if she noticed damage indicative of a collision with a
deer as opposed to another vehicle, she would “let the
adjuster . . . know that they may need to look into it
16                                            No. 06-3195

a littler further” because “there’s a coverage difference.”
Roe-Midgett acknowledged that deer-vehicle collisions
would be covered by the claimant’s “comprehensive” rather
than “collision” policy, which may carry different de-
ductibles. She also explained that if she felt certain
damage was preexisting, she would “let the file handler
know that this damage is not part of this claim” because
“we don’t pay for claims we do not owe.” In other words,
MDAs like Roe-Midgett make coverage recommenda-
tions to their superiors. The applicable regulations
explain that “decisions made as a result of the exercise of
discretion and independent judgment may consist of
recommendations for action rather than the actual tak-
ing of action.” 29 C.F.R. § 541.207(e)(1).
  The balance of an MDA’s day-to-day responsibilities
mirror the duties the new regulations attribute to ex-
empt “claims adjusters,” namely: “interviewing insureds
[and] witnesses . . . ; inspecting property damage; re-
viewing factual information to prepare damage esti-
mates; evaluating and making recommendations re-
garding coverage of claims; [and] determining . . . [the]
total value of a claim.” 29 C.F.R. § 541.203(a) (2006).
That MDAs are not engaged in determining liability and
making recommendations regarding litigation does not
mean they are not “claims adjusters” as defined in the
regulations. The Secretary of Labor has explained that
section 541.203 “identifies the typical duties of an exempt
claims adjuster.” 69 Fed. Reg. at 22144 (emphasis added).
As such, the regulation “does not require the adjuster
to perform each and every activity listed.” In re Farmers,
481 F.3d at 1129.
  We recognize section 541.203(a) is not meant to confer
a “blanket exemption for claims adjusters.” DOL Wage &
Hour Div. Op. Ltr. FLSA2005-2, at 2 (Jan. 7, 2005). We
are required to conduct “a case-by-case assessment to
determine whether the employee’s duties meet the require-
No. 06-3195                                              17

ment for exemption.” 69 Fed. Reg. at 22144. Because the
undisputed evidence here establishes that MDAs spend
most of their time in the field investigating, estimating,
and settling auto damage claims—unsupervised and up
to their $12,000 limit of authority—we conclude that
their duties involve the exercise of sufficient discretion
and independent judgment to come within the scope of
the administrative exemption.
  The plaintiffs counter that MDAs are so constrained by
CCS’s adjusting manual and estimating software that
there is no room for independent judgment. But inde-
pendent judgment is not foreclosed by the fact that an
employee’s work is performed in accordance with strict
guidelines. Kennedy, 410 F.3d at 374-75; Cheatham, 465
F.3d at 585. Moreover, MDAs have the leeway to deviate
from the adjusting manual provided they document their
reasons for doing so, authority that itself connotes dis-
cretion and independent judgment. Moreover, the use
of computer software does not itself imply a lack of inde-
pendent judgment or discretion. Kennedy, 410 F.3d at 375;
In re Farmers, 481 F.3d at 1130; Cheatham, 465 F.3d at
585. While MDAs use a software program to guide their
preliminary estimates, they do not use a computer to (1)
detect possible fraud or damage inconsistent with the
claim; (2) communicate with body shops to obtain part and
labor costs below those generated by the software; (3)
determine whether and what parts to repair instead of
replace; (4) explain the estimate to the claimant; or (5)
settle a claim within their prescribed settlement authority.
As with the adjusting manual, MDAs may override the
estimating software in certain instances. The adjusting
manual and the estimating software are most accurately
characterized as tools that channel rather than eliminate
the MDAs’ discretion. See Kennedy, 410 F.3d at 374.
  The plaintiffs further contend that MDAs simply draw
on their skill and experience in inspecting damage and
18                                              No. 06-3195

estimating repair costs. They are correct to the extent
that “appraisers who merely inspect damaged vehicles
to estimate [repair costs] . . . are guided primarily by
their skill and experience” and thus are not exercising
discretion and independent judgment. In re Farmers, 481
F.3d at 1128 (quoting DOL Wage & Hour Div. Op. Ltr.,
at 1-2 (Feb. 18, 1963)); see also 29 C.F.R. § 541.207(c)(1);
DOL Wage & Hour Div. Op. Ltr. FLSA2005-2, at 2-3
(opining that “junior-level claims adjusters” who prima-
rily conduct scripted interviews over the telephone
apply their skills and knowledge rather than exercise
their discretion and independent judgment). But the
MDAs do far more than just appraise damage. They also
investigate the claim, check for fraud, decide whether
to repair or replace parts, negotiate with body shops, and
settle claims up to $12,000. MDAs thus are not mere
appraisers; appraising damage is included among many
duties MDAs perform in the course of adjusting auto
damage claims.
   We could find no appellate cases or opinion letters
in which a claims-processing employee with similar
responsibilities to the MDA’s was found to be nonexempt.
All the appellate cases involving claims-processing em-
ployees have arrived at the same conclusion we have
reached here. See In re Farmers, 481 F.3d at 1132 (ad-
dressing “automobile damage adjusters”); Cheatham,
465 F.3d at 585-86 (addressing “adjusters who handled
liability claims for bodily injury and damage to property”);
McAllister, 325 F.3d at 998, 1001 (addressing a “claims
coordinator”). So have a number of district court cases. See,
e.g., Jastremski v. Safeco Ins. Co., 243 F. Supp. 2d 743,
746, 758 (N.D. Ohio 2003) (addressing a “senior claims
representative”); Palacio v. Progressive Ins. Co., 244 F.
Supp. 2d 1040, 1049 (C.D. Cal. 2002) (addressing a “claims
representative”).
No. 06-3195                                              19

   The plaintiffs cite only three district court cases in
support of their argument that MDAs do not exercise
discretion and independent judgment. The first, In re
Farmers, 336 F. Supp. 2d. 1077 (D. Or. 2004), was over-
ruled on appeal, 481 F.3d 1119. The second relied on the
overruled In re Farmers decision to such an extent that
it too is unpersuasive. Robinson-Smith, 323 F. Supp. 2d
at 25 n.7 (“[T]he Court finds the reasoning of . . . [In re
Farmers] to be persuasive.”). The third case, Reich v.
American International Adjustment Company, involved
“auto damage appraisers” who had no settlement author-
ity and whose sole responsibility was to “determine the
cost of repair.” 902 F. Supp. 321, 324 (D. Conn. 1994). In
contrast, MDAs have settlement authority up to $12,000,
and the record establishes that they routinely exercise this
authority. The average payout is relatively small (Roe-
Midgett’s average payout was $1724 per claim from
January through November 2002), but “nothing in the
regulation suggests that ‘smaller claims’ . . . should be
treated differently.” In re Farmers, 481 F.3d at 1133. In
sum, the district court properly concluded the MDAs
were exempt administrative employees.

II. The Field Claims Representative and Property
    Specialist Positions
  The plaintiffs’ only argument on appeal regarding the
Field Claims Representative and Property Specialist
positions is that triable issues of fact preclude summary
judgment for CCS. However, they identify no issues of
material fact specific to either of these positions. At oral
argument we asked plaintiffs’ counsel for an example of
a factual dispute involving either position. Counsel cited
the fact that CCS’s adjusting manual and estimating
software significantly limited the degree of discretion and
judgment exercised by these employees. This is not a
20                                              No. 06-3195

factual dispute. There is no disagreement about whether
CCS’s adjusting manual and estimating software govern
the claims adjustment process; they do. The parties’
dispute is about the legal consequences of that undis-
puted fact: that is, whether the manual and software so
limit the employees’ discretion as to make the admini-
strative exemption inapplicable. See Worthington, 475
U.S. at 714 (“The question of how the respondents spent
their [time at work] is a question of fact. The question
whether their particular activities excluded them from the
overtime benefits of the FLSA is a question of law . . . .”).
  We have already determined that the manual and
software do not eliminate the discretion and judgment
exercised by an MDA; the plaintiffs have not offered any
additional argument specific to the Field Claims Rep-
resentative or Property Specialist positions. Accordingly,
the plaintiffs have failed to develop a meaningful chal-
lenge to the district court’s order granting summary
judgment to CCS with respect to these two positions. See
Smith v. Ne. Ill. Univ., 388 F.3d 559, 569 (7th Cir. 2004)
(undeveloped argument constitutes waiver).
                                                 AFFIRMED.

A true Copy:
      Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit

                   USCA-02-C-0072—1-4-08