Free Response to Motion - District Court of Arizona - Arizona

Lydia A. Jones - 017178 ROGERS & THEOBALD LLP 2 The Camelback Esplanade, Suite 850 2425 East Camelback Road 3 Phoenix, Arizona 85016
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Telephone: (602) 852-5582 [email protected]

Attorneys for Plaintiffs UNITED STATES DISTRICT COURT ARIZONA DISTRICT KAYE HUTTON, as an individual and representative of a class consisting of others similarly situated, Plaintiff, vs. BANK OF AMERICA, N.A., Defendant. No. CV2003-2262-PHX-ROS Plaintiff's Statement of Facts in Support of Plaintiff's Motion for a Final Finding of Willfulness Under The Fair Labor Standards Act

Plaintiff Kaye Hutton, on behalf of herself and the collective opt-ins, hereby submits the following statement of facts in support of her motion to convert this Court's conditional finding of willfulness entered on November 9, 2005, to a final finding of willfulness under the Fair Labor Standards Act (FLSA). 1) Based on the evidence previously presented, this Court determined that there was sufficient and material evidence of willfulness to allow the statute of limitations to be expanded to three years.1 2) Subsequent discovery since the Court Order has further confirmed willfulness, thus making it appropriate for this Court to make a final

See Court Order dated November 9, 2005; See Transcript of Oral Argument at p. 4 attached as Exhibit A. All of the Exhibits referenced herein and referenced as "attached hereto" are attached to Plaintiff's Motion for Final Finding of Willfulness filed June 13, 2006.

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finding of willfulness and among other things extend the statute of limitations to three years.2 3) There is ample evidence demonstrating that the defendant Bank knew, or alternatively and equally sufficient, recklessly disregarded a distinct and appreciable possibility, that it was violating the FLSA overtime provisions. 4) Since 1942, the United States Department of Labor, Wage and Hour Division, ("DOL") has been investigating and initiating litigation against the defendant Bank for overtime violations of the FLSA.3 5) Within the last ten years alone, the DOL has investigated the defendant Bank for FLSA violations in excess of 79 (seventy-nine) times.4 6) Many of these investigations led to findings of FLSA overtime violations and the Bank, apparently admitting to the violations, has paid significant amounts of retroactive overtime pay to over 310 employees, as well as civil monetary penalties.5 7) Telling for purposes here of whether the Bank knew or should have known from these ongoing investigations and findings of overtime violations that its conduct was unlawful beginning in May 2000, the DOL investigated the defendant Bank in Florida from August, 1998 ­

Plaintiff believes, as set forth herein, that it has sufficiently established willfulness, even without the notes taken by now deceased attorney Barbara Davis, which are currently under this Court's review. Plaintiff, however, submits that to the extent Defendant opposes plaintiff's motion for a final finding of willfulness, plaintiff be allowed to supplement this record with the notes, assuming, of course, that the Court orders their disclosure. 3 See e.g., Fleming v. Bank of America, 5 Labor Cases P 60,964 (1942), affd 7 Lab. Cas. (CCH) P 61,934 (9th Circuit 1943). Based on a Lexis.com search, Fleming appears to be the first reported decision of litigation initiated by the Department of Labor against Bank of America to restrain violations of overtime and record keeping provisions of the FLSA. 4 See Plaintiff's Expert's Preliminary Report, pp. 1, 13-14 attached hereto as Exhibit C. 5 See Examples of DOL Findings of Overtime Violations, Imposition of Overtime Wages, and Imposition of Civil Monetary Penalties Against Defendant Bank of America attached as Exhibit D.

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August, 2000, and again in North Carolina from March, 2000 through March, 2002. As a result of the Florida investigation, the DOL found 74 violations of the FLSA for failure to pay for overtime hours that were worked "off the clock,' and the Bank agreed to pay retroactive overtime in the amount of $37,784 to employees for the off the clock hours worked. In addition, the DOL imposed and the Bank agreed to pay "civil monetary penalty" in the amount of $3,700 for the Bank's prior violations of the FLSA. [See Exhibit D.] 8) At the same time, beginning in March 2000, the DOL was also investigating the defendant Bank in the state of its corporate headquarters, North Carolina. As a result of that investigation, the DOL found 314 violations of the FLSA, again in the form of failure to pay for overtime hours that were worked "off-the-clock," and the Bank again agreed to pay retroactive overtime in the amount of $67,466 to employees for the overtime hours worked. In addition, the DOL

imposed and the Bank agreed to pay "civil monetary penalty" in the amount of $15,650 for the Bank's prior violations of the FLSA. [See Exhibit D.] 9) There were several other DOL investigations that led to additional findings of overtime violations and to additional impositions of civil monetary penalties against the Bank for its repeated and prior violations of those same overtime FLSA provisions. [See Exhibit D.] 10) In nearly every case where the DOL found a violation, it procured agreement from the Bank that it (the Bank) would comply with the overtime provisions of the FLSA. As indicated by findings of

subsequent FLSA overtime violations, and as demonstrated by the
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Bank's responses to discovery, however, the Bank did not honor its agreement with the DOL of "future compliance." [See Exhibit D.] 11) Specifically, in response to discovery in this case for the identification of witnesses and for the production of all documents relating to the Bank's efforts to comply with "future compliance agreements" with the DOL, defendants responded: "None."6 12) During the relevant time frame of this case (including from 1999 through 2002) the Bank defended and settled several overtime collective and/or class actions, including 3 private overtime lawsuits filed by client managers in other states. Specifically, beginning in 1999, client managers working in California sought substantial unpaid overtime wages through private lawsuits.7 These California client

manager private lawsuits were on behalf of over fifty-five percent (55%) of the client managers employed by the Bank nationwide.8 Subsequently in 2002, additional client manager overtime private litigation cases were filed as well.9 13) The Court may recall that in connection with the 1999 client manager overtime litigation, the Bank's in-house attorney, Jay Price, retained the

See Defendant's Responses to Plaintiff's Fourth Request for Documents, Response Number 3 attached as Exhibit E; Defendant's Answers to Plaintiff's First Set of Interrogatories, Answer Number 3 attached as Exhibit F. Significantly, the Bank also failed to produce any documents to plaintiff in connection with any of the Department of Labor investigations and findings of violations against the Bank. See Exhibit E; Exhibit F. 7 See Hurley v. Bank of America, Superior Court for the State of California, County of Los Angeles, filed September 29, 1999; Goss v. Bank of America, NA, Superior Court for the State of California, County of Los Angeles, filed January 19, 2000, Case BC 223312; Kove v. Bank of America Corp., Superior Court for the State of California, County of Santa Barbara, filed February 2, 2000, Case BC 1002212. 8 See Deposition of Patricia Roche-Fukushima ("Depo. Roche-Fukushima"), p. 71, lines 15-16, attached as Exhibit G. 9 This includes the case Luciano et al v. Bank of America, Superior Court for King County, State of Washington, Case 02-2-07254.

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former head of the Department of Labor for California, Lloyd Aubry, to conduct a study of client managers in the State of Washington. Upon instructions of Mr. Price, Mr. Aubry traveled to Washington, interviewed client managers selected by the Bank,10 and reported his findings to the Bank on a teleconference call with Mr. Price and the Bank's outside California litigation counsel. That teleconference took place in May 2000 and lasted one hour. The only contemporaneous recording that was made by the Bank of this conversation are the notes of now deceased attorney Barbara Davis, currently under review by this Court. 14) From the limited information provided to date based on Mr. Aubry's six (6) year recall of the conversation, during the May 2000 teleconference, Mr. Aubry told the Bank and its attorneys that based upon his study and review of the client manager position as performed by the client managers selected by the Bank, whether the client managers were exempt from overtime pay was an "open question" and that they "appeared to be non-exempt," and that the Bank "might want to reexamine the exempt status" and "perhaps even make some changes ... to the exempt status."11

15) Specifically, Mr. Aubry testified:

See Deposition of Lloyd Aubry (hereinafter "Aubry Depo."), p. 53 (lines 10-23); p. 55 (lines 4-413). All of the pages cited herein to the Aubry Depo are attached as Exhibit H . 11 See Aubry Depo. p.126 (lines 4-9); p. 133 (lines 7-17); p. 134 (lines 13-25); p. 135 (lines 1-20); p.136 (lines 13-15 and lines 22-25); p.137 (lines 1-3) (Exhibit H ); Declaration of Lloyd Aubry (hereinafter "Aubry Dec."), ¶¶ 8, 15, attached as Exhibit I .

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I told the Bank ...that it might want to reexamine the exempt/nonexempt status of the position.12 I told the Bank that... the client managers were performing in a nonexempt way. And then depending upon other factors, they might or might not be exempt or nonexempt. Q: So it was an open question? A: Correct."13 "I also told the attorneys ...that the Bank might want to monitor performance of the position more closely and perhaps even make some changes to either the position itself or the exempt status"14 I told the Bank that the client managers I talked to, including the more experienced client managers, "might be" and "appeared to be" performing the job in a non-exempt manner."15 I was telling them that some of the people were potentially doing this in a nonexempt way and, therefore, they needed to think about the position itself. And there were a number of different options that they could take, but this was ­ these were experienced labor counsel and they needed to figure out how they wanted to address it. So I didn't make a specific recommendation as to what I thought they ought to do because there are a lot of different things one could do. 16 16) Given this testimony, it is clear that Mr. Aubry, the Bank's selected and paid expert/consultant, put the Bank on notice in May 2000 of the "distinct and appreciable possibility" that the client managers were misclassified under the FLSA as exempt from overtime. In other

words, there was an "open question," that the client managers were not exempt from overtime; a question that given the then pending DOL

See Aubry Dec. ¶ 8 (Exhibit I). See Aubry Depo. p. 126, lines 4-9 (Exhibit H) 14 See Aubry Dec. ¶ 15 (emphasis added) (Exhibit I). See also Aubry Depo. p. 141 (lines 19-24) affirming that the entirely of ¶ 15 is true (Exhibit H). 15 See Aubry Depo. p. 133, lines 7-17; p. 134 (lines 13-25); p. 135 (lines 1-20); p.136 (lines 13-15 and lines 22-25); p. 137 (lines 1-3) (Exhibit H). 16 See Aubry Depo. p. 127 (lines 1-11) (Exhibit H).
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investigations in Florida and in North Carolina concerning additional FLSA overtime violations that should have been explored further. 17) Mr. Aubry testified that he was instructed not to do any further work, nor memorialize his findings. Mr. Aubry also testified that he has no information as to whether his recommendations or ideas were implemented, nor any information as to whether the Bank took affirmative steps as he had suggested they should.17 18) Discovery is now closed, and defendants have presented no evidence that after the May 2000 call, the Bank made any further inquiry into the possibility of FLSA violations raised by Mr. Aubry. 19) In any event, the Bank has admitted that it did not act on the information provided in May 2000 by Mr. Aubry until nearly two years later, when, in March 2002, it based its decision to reclassify the exempt status of all client managers to non-exempt status on Mr. Aubry's study and his findings. 18 20) In short, the Bank's in-house counsel responsible for FLSA matters, Jay Price, kept the information he learned in May 2000 to himself, and rather than acting on the information or inquiring further to resolve the doubt of compliance raised by his paid expert consultant Mr. Aubry. Instead (and notwithstanding the California decision in Huss being decided in 2000 as well), Mr. Price continued to treat the client managers as exempt from overtime apparently until he settled the

See Aubry Depo. p. 117, lines 20-25; p. 118 (lines 1-25); p. 119, (lines 1-19); p.120, lines 18-25 ­ p. 121, lines 1-12 (Exhibit H). 18 See Defendant's Third Supplemental Response to Plaintiff's Request for Production of Documents, Request Number 4 (producing the former head of the Department of Labor's file and notes that formed the basis of his advice in response to plaintiff's request for "all documents that refer or relate to the Bank's decision to treat client managers as non-exempt") attached as Exhibit J

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California client manager overtime litigation and implemented the reclassification in March 2002. 21) Indeed, even the Bank's own witness, Mark Reale, recently produced by the Bank as the business executive who, in consultation with Mr. Price, made the decision to reclassify client managers in March 2002, testified that: a) he was never made aware by Mr. Price, or anyone at the Bank, of Mr. Aubry's study or the information Mr. Aubry had conveyed to the Bank and its outside counsel; and b) the first he even heard of Mr. Aubry's name was in May 2006 ­- six (6) years after the Aubry study and Aubry telephone conference ­ during his preparation with Mr. Chester, litigation counsel for the Bank in this case.19 22) As presented in plaintiff's earlier motion, after the reclassification in March 2002, Bank market managers pressured client managers to work "off the clock" and not to report overtime hours.20 23) Regardless of the reasons for not reporting all overtime hours worked, the Bank's own documents and the testimony of the opt-ins demonstrate that the Bank was aware in 2002, in 2003, in 2004, and in 2005, that client managers were working but not recording overtime hours. For example, several months after the March 2002 reclassification, the executive management of premier banking met to discuss "client manager reluctance" to record all overtime hours.21

See Deposition of Mark Reale, p. 42 (lines 12-14); 43 (lines 4-6); p.44 (lines 1-3); p. 48 (lines 924); p. 49 (line 1); p. 50 (lines 11-15); 57 (lines 22-24); p. 58 (lines 1-25); p. 59 (lines 1-6) attached as Exhibit K. 20 See Plaintiff's Motion to Expand at pp. 7-9. 21 See Bank of America Premier Client Manager Reclassification document (apparent from its face dated after July 2002) stating "client managers continue to be reluctant to record overtime" attached as Exhibit L.

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24) In addition, in late 2003 and early 2004 and as a result of this lawsuit having been filed, the Bank contacted each of its then client managers, asking them to confirm whether they were working but not recording overtime hours. Many client managers told the Bank that they were working, but not recording, overtime, and specified the number of those hours;22 these client managers even told the Bank why ­ either because their market manager told them not to record all hours worked or because they did not think their market manager wanted them to.23 25) To date, none of the client managers (including the non-opt-ins24) who were interviewed and told the Bank that they had worked off-the-clock hours have been compensated for those hours. 26) In addition to the Bank's own documents, the opt-in testimony provided in this case also demonstrates that the Bank was aware that after March 2002, overtime hours were being worked but not compensated. That is because, consistent with the client manager

statements, it was happening at both the explicit and implicit direction of the client manager's bosses ­ the market managers. 27) According to opt-in testimony, the market managers pressured client managers to work "off the clock" and not to report overtime hours

See Client Manager Statements of Stephanie Clark, Kirsten Dawson, Margaret McClintic, Kathleen McGrory, Janice Peterson, Dianna Roggenbuck, Shawn Stryker, Renae Watkins, and Sherry Weaver all of which are attached as Exhibit M. 23 See Id. 24 The Court may recall that prior to plaintiff filing its initial motion for a willfulness finding, the defendant Bank would not disclose to plaintiff all of the Client Manager Statements. The Court, however, on April 5, 2006 recently compelled the defendant to do so. Significantly, non-opt-ins Ms. Stryker and Ms. Watkins' client manager statements previously being withheld from plaintiff demonstrate that even these client managers (who did not opt-in to the lawsuit), had put the Bank on notice in 2003 and 2004 of their off the clock hours worked, yet the Bank apparently continues to withhold overtime compensation for those hours as well. See Client Manager Statement of Shawn Stryker and Client Manager Statement of Renae Watkins in Exhibit M.

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because of budgetary constraints; in addition the market managers encouraged that overtime hours be worked in order to meet the sales goals set by the Bank.25 28) Specifically as the Court may recall, one opt-in was told by her market manager that she should not record all hours worked, but instead should consider those hours a "personal investment."26 29) Another opt-in was told (by her market manager's assistant) not to record hours worked during lunch.27 30) Another was told by her market manger that the overtime hours worked and recorded had to be spread among the "team" of client managers, regardless of how many hours each individual actually worked, and she should to take "comp time" in lieu of showing all overtime hours worked.28 31) And finally another opt-in, who provided deposition testimony subsequent to plaintiff's initial motion for willfulness, testified that her market manager told her and the other client managers in her group that: a) she (the market manager) was over budget in a number of categories so "there wasn't a cushion for the overtime being alleged;"

See Plaintiff's Objections and Responses to Defendant's Interrogatories and Request for the Production of Documents, served June 7, 2006 attached as Exhibit N; See Krebsbach Depo, pp. 69 73 attached hereto as Exhibit O. See also Plaintiff's Objections and Responses to Defendant's First Set of Interrogatories and First Request for the Production of Documents [Exhibit P]; Opt-In Declarations [Exhibits Q]; Opt-In Massignani Dec., ¶¶ 13-18 [Exhibit R]; Hutton Depo. p. 156 (lines 1-25); p. 158 (lines 1-25), p. 160 (lines 1-5, 21-25), p. 161 (21-25), p. 162 (lines 1-2), p. 169 (lines 22-25), p. 170 (lines 1-19), p. 187 (lines 12-23) [Exhibit S]; Peterson Depo. p. 47 (lines 17-21), p. 48 (lines 17-21), p. 61 (line 21-23), p. 92 (lines 15-25), p. 93 (lines 1-25), p. 94 (lines 1-25), p. 95 (lines 1-10) [Exhibit T]; McClintic Depo. p. 66 (lines 14-21) [Exhibit U]. 26 See Massignani Declaration,¶ 15 (Exhibit R). 27 See Peterson Depo., p. 43 (lines 11-25); p. 44 (lines 1-22); and p.47 (line 8 and lines 15-16) (Exhibit T). 28 See McClintic Depo., p. 34 (lines 10-25), p. 35 (lines 1-24), p. 56 (lines 14-17), p. 66 (lines 1425), p. 67 (lines 1-11), p. 75 (lines 8-25, p. 76 (lines 6-25), p. 77 (lines 1-14) [Exhibit U].

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and b) "do not record all of the hours you work."29 32) To date, none of the off-the-clock hours, of which the Bank was made aware, ever led to a further inquiry, let alone payment of overtime compensation. 33) In fact, there was apparently no consideration at all by the Bank as to whether, and when, they might compensate client managers for these off-the-clock hours. 34) Instead, in July 2005, the Bank reclassified client managers as exempt from overtime and never paid retroactive compensation for the off-theclock hours worked from 2002 - 2005. 35) The Bank received advice from a former official of the California Department of Labor in May 2000 to the effect that the conduct in question may very well be unlawful. 36) The Bank had "knowledge" of FLSA requirements from having previously defended against numerous private and government FLSA lawsuits ­ including (a) the numerous investigations on Exhibit D, and specifically the 1998-2000 investigation that led to 74 violations of the overtime provisions of the FLSA and the 2000-2002 North Carolina investigation that led to 314 violations of the overtime provisions of the FLSA; and (b) the 1999 California private lawsuits and the 2002 Washington private lawsuit initiated employees holding the same position at issue in this case, the client manager position. 37) The Bank was placed on notice (by the multiple findings of overtime violations by the DOL (in particular those from the 1998-2002

See Krebsbach Depo., p. 69, lines 14-16; p 72, lines 2-4, attached hereto as [Exhibit O].

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timeframe referenced above), the multiple overtime private lawsuits from 1999-2005, and the May 2000 advice of its paid expert, Mr. Aubry) of possible non-compliance with the FLSA. 38) The Bank failed to make any inquiry, let alone a further adequate inquiry as to such possible non-compliance. 39) The Bank waited nearly two years, after being on notice of possible FLSA overtime violations, to implement a corrective plan, and when it did, it failed to pay retroactive overtime. 40) After having been on notice for nearly two years that the client managers were likely non-exempt, reclassified the position as nonexempt in March 2002, but failed to pay retroactive overtime. 41) Upon actual notice of the law regarding paying for off the clock hours worked from the DOL findings and upon actual notice (as indicated in the Bank's own documents and the Bank market manager's own conduct -- all of which is further substantiated by the opt-ins' testimony) of hours being worked off-the-clock from 2002 through 2005, failed to pay client managers for those overtime hours.

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DATED this 26th day of June, 2006. ROGERS & THEOBALD, LLP
By /s/ Lydia A. Jones

Lydia A. Jones The Camelback Esplanade, Suite 850 2425 East Camelback Road Phoenix, Arizona 85016 Telephone: (602) 852-5582 Attorneys for Plaintiffs JENNINGS, STROUSS & SALMON, PLC Michael J. O'Connor The Collier Center, 11th Floor 201 E. Washington Street Phoenix, AZ 85004 Telephone: (602) 262-5889 Attorneys for Plaintiffs

I hereby certify that on this 26th day of June, 2006, I electronically transmitted to the clerk's office using the CM/ECF system for filing and transmittal of a notice of 14 electronic filing to the following CM/ECF registrants:
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Charles L. Chester 16 Ryley Carlock & Applewhite One North Central Avenue, Suite 1200 17 Phoenix, AZ 85004-4417 18 Attorneys for Defendant Bank of America, N.A.
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By: /s/ Lydia A. Jones

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