Free Motion to Supplement - District Court of Arizona - Arizona

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LATHAM & WATKINS LLP Joel E. Krischer, Esq. (Ca. Bar No. 066489) (admitted pro hac vice) [email protected] Joanna R. Wolfe, Esq. (Ca. Bar No. 217409) (admitted pro hac vice) [email protected] 633 West Fifth Street, Suite 4000 Los Angeles, California 90071 Telephone: (213) 485-1234 Facsimile: (213) 891-8763 Attorneys for Defendants IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA IN RE ALLSTATE INSURANCE COMPANY FAIR LABOR STANDARDS LITIGATION, MDL NO. 1541

DEFENDANTS' REQUEST TO FILE SUPPLEMENTAL BRIEF AND LODGING OF NEW AUTHORITY RELEVANT TO THE PENDING MOTIONS (a) TO FACILITATE NOTICE (all cases)
AND

(b) FOR SUMMARY JUDGMENT (Gaglione, et al. v. Allstate Ins. Co., et al., CV 04-0015-PHX-PGR) Assigned to the Hon. Paul G. Rosenblatt Dept.: 621 [Oral Argument Requested] Defendants Allstate Insurance Company, Allstate Property and Casualty Insurance Company, Allstate Indemnity Company, Karl Meckert and Kim Lowe (collectively, "Defendants") request this Court's permission to file this supplemental brief to bring to the Court's attention a recently issued opinion of the Deputy Administrator of the United States

Case 2:03-md-01541-PGR

Document 109

Filed 09/20/2005

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Department of Labor ("DOL") that is directly relevant to the issues raised by both Plaintiffs' Motion to Facilitate Notice in all cases and Defendants' Motion for Summary Judgment against the Gaglione Plaintiffs in In re Allstate Insurance Company Fair Labor Standards Litigation, MDL No. 1541. On August 26, 2005, the DOL issued the letter dated August 26, 2005 attached hereto as Appendix A (published at BNA Daily Lab. Rep. No. 180 at E-9 (September 19, 2005) ("DOL Letter II") 1 regarding the exempt status of claims adjusters of a "third party administrator" that "exists to sell claims adjusting and other services to insurance companies, insurance brokers and/or self- insured companies." DOL Letter II at 1. This Court will see that DOL Letter II considered the exempt status of three broad categories of claims adjusters ­ Claims Specialists I who were closely supervised on every file and Claims Specialists II and Senior Claims Specialists whose files were only spot-checked ­ and reached the following conclusions that are directly relevant to the overtime/misclassification claims raised in the cases pending before this Court. · Even though (unlike an insurance company) a third party administrator "exists to provide" claims services, the opinion concludes all three categories were involved in servicing the business of their employer's customers, making them administrative rather than "production" employees under the so-called "administrative/production dichotomy." Id. at 5-6.2 While relevant to both pending motions, this conclusion is especially

relevant to the Motion to Facilitate notice as it directly undercuts the primary theory on which that motion was premised ­ liability may not be imposed "collectively" based on the dichotomy because the dichotomy is "illustrative, rather than dispositive " and because the letter reconfirms that adjusters are not "production" workers in any event.
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Defendants refer to this letter as "DOL Letter II" to distinguish it from the DOL Letter issued on August 2, 2002 which was cited in Defendants' original memoranda in opposition to Plaintiffs' Motion to Facilitate Notice and in support of Defendants' Motion for Summary Judgment and given the shorthand title "DOL Letter" in those memoranda. Defendants will not repeat the discussion of the authority to the effect that such letters are entitled to deference, but note only that DOL Letter II is entirely consistent with the previously cited letter.
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Although DOL Letter II was issued under the revised regulations that became effective on August 23, 2004, the letter also expressly notes that, as the new regulations themselves state, the response is applicable under both the revised and old regulations as "there were no substantive changes in the primary duty test of the administrative exemption." Id. at 1.

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·

While finding that the close supervision to which the Claim Specialists I were subjected meant they did not exercise the necessary judgment and discretion to be exempt (id. at 78), the letter concludes that the much more remote supervision of the other specialists meant that they were properly classified as exempt (id. at 9-10). This conclusion is also relevant to both motions, but is especially relevant to the Motion for Summary Judgment against the three Gaglione Plaintiffs. Indeed, the letter's description of the duties

performed and the level of judgment and discretion exercised is virtually identical to the duties that the three Gaglione Plaintiffs admittedly performed. As summarized by the letter, those specialists "are not merely using a standardized format for resolving claims, but rather are using their own judgment about what the facts show, who is liable, what a claim is worth and how to handle the ne gotiations with the claimant or the claimant's representative in order to achieve a successful resolution." Id. at 10. 3 Defendants respectfully submit that DOL Letter II employs the precise analysis that Defendants have advocated in opposing Plaintiffs' Motion to Facilitate Notice and in Defendants' Motion for Summary Judgment against the Gaglione Plaintiffs in this matter, and that this Court should also employ that analysis and reach a similar conclusion. RESPECTFULLY SUBMITTED this 20th day of September, 2005

s/ Joel E. Krischer Joel E. Krischer LATHAM & WATKINS LLP 633 West Fifth Street, Suite 4000 Los Angeles, CA 90071-2007 Telephone: (213) 891-7939 Facsimile: (213) 891-8763 [email protected] Attorne ys for Defendants Additional Attorneys: Donald A. Wall (Arizona Bar No. 007522) [email protected]
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The portion of the letter on this issue that is more relevant to the Motion to Facilitate Notice is the statement that such a determination must be made on a "case-by-case" basis in applying the duties test. Id. at 7.

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Kate E. Frenzinger (Arizona Bar No. 023100) [email protected] Squire, Sanders & Dempsey, L.L.P. Two Renaissance Square 40 North Central Avenue, Suite 2700 Phoenix, Arizona 85004-4441 Telephone: (602) 528-4000 Facsimile: (602) 253-8129

FILED electronically this 20th day of September, 2005, with: Clerk, United States District Court Sandra Day O'Connor U.S. Courthouse 401 W. Washington St., Ste. 130, SPC 1 Phoenix, Arizona 85003-2118 COPY of the foregoing sent by overnight mail this 20th day of September, 2005, to: Kelly McInerney, Esq. McInerney & Jones 18124 Wedge Parkway, Suite 503 Reno, NV 89511 Attorney for Plaintiffs Mark Wintering, Esq. Robert E. Sweeney Co., LPA 55 Public Square, Suite 1500 Cleveland, OH 44113 Attorney for Plaintiffs Andrea Elisabeth Watters, Esq. Watters & Watters, PC 2807 E. Broadway Blvd. Tucson, AZ 85716 Attorney for Plaintiffs Hal Gillespie, Esq. Gillespie, Rozen & Watsky 3402 Oak Grove Avenue, #200 Dallas, TX 75204 Attorney for Plaintiffs By: s/ Kristi A. Miller

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