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RYLEY CARLOCK & APPLEWHITE One North Central Avenue, Suite 1200 Phoenix, Arizona 85004-4417 Telephone: 602/258-7701 Telecopier: 602/257-9582 Charles L. Chester 002571 Carolann E. Cervetti 014143 John M. Fry - 020455 Attorneys for Bank of America, N.A. UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA KAYE K. HUTTON, as an individual and as representative of a class consisting of others similarly situated, Plaintiff, v. BANK OF AMERICA, N.A., Defendant. No. CV2003-2262-PHX-ROS
STATEMENT OF FACTS IN SUPPORT OF MOTION FOR DECERTIFICATION AND MOTION FOR PARTIAL SUMMARY JUDGEMENT (Assigned to the Honorable Roslyn O. Silver)
Defendant Bank of America, N.A., by and through its counsel and pursuant to Rule 56 of the Federal Rules of Civil Procedure, and the procedures necessary to determine collective certification pursuant to 28 U.S.C. § 216(b), hereby files this Statement of Facts in Support of its Motion for Decertification and Motion for Partial Summary Judgment. I. The Bank. 1. Defendant Bank of America, National Association (the "Bank") is a
national banking association organized and existing under the laws of the United States. During the relevant period, the Bank was organized into banking groups, one of which was the Consumer and Commercial Banking Group. (Exhibit 25, Mark Reale Affidavit ¶3). 2. Within the banking group was the Premier Banking division. In that
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division was the Southwest Region, consisting of Arizona and other states (which varied through time). Within Arizona were four Markets - Tucson, East Valley, Scottsdale and West Valley. (Exhibit 2, Reale Depo., p. 20, lns. 5-13; Exhibit 3, Steve Cortopassi Depo., p. 28, lns. 11-17); Exhibit 18(a)(b)(c)(d). 3. Within the banking group also was the Small Business Banking division.
In that division was the Southwest Region, consisting of the Arizona Market and others. (Exhibit 2, Reale Depo., p. 20, lns. 5-13; Exhibit 4, Patricia Roche-Fukushima Depo., pp. 13-14, lns. 6-3; Exhibit 5, Lynn Searles Depo., p. 12-13, lns. 8-7). 4. Client Managers in the Small Business Banking division, later known as
the Business Banking division, ("Small Business"), practice relationship banking like Premier Client Managers, but their clientele and financial responsibilities are different. Small Business Client Managers cater to business clients, focus on products and services valuable to these business clients, and are involved in the general business operations of the clients they serve. (Exhibit 18(f), affidavit of Keith Beccue, ¶¶ 4-8; Exhibit 7, Therese Krebsbach Depo., p. 30, lns. 10-17; Exhibit 5, Searles Depo., p. 15, lns. 9-11; p. 50, lns. 20-24, p. 91, lns. 11-15). 5. The Small Business and Premier Client Managers report to wholly
different management and through separate chains of command (Exhibit 5, Searles Depo. p. 13, lns. 3-7; p. 54-55, lns. 19-12; Exhibit 7, Krebsbach Depo. p. 28, lns. 3-7), there is a different incentive plan for Premier Client Mangers than Small Business Client Managers and there is a different support staff network for Premier Client Managers than Small Business Client Managers. (Exhibit 2, Reale Depo., p. 12, lns. 28; Exhibit 5, Searles Depo., p. 12, lns. 8-15; Exhibit 3, Cortopassi Depo., pp. 74-75, lns. 18-20; Exhibit 18(a), affidavit of Frank Santos, ¶ 6). 6. The number of clients managed by Small Business Client Managers is
generally smaller. Plaintiff, Kaye Hutton,("Ms. Hutton") testified she had "around 400" clients in her portfolio; Market Manager Lynn Searles testified that Small Business Client Managers had portfolios of 250350 clients. (Exhibit 10, Hutton Depo. p. 121,
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lns. 7-10; Exhibit 5, Searles Depo. p. 43, lns. 11-17). 7. The Premier Banking division ("Premier") services "mass affluent" Bank
clients who have $100,000.00 or more in combined deposits, lines of credit, loans and investments (not including a first mortgage), or $250,000.00 in combined balances (including a first mortgage) ("qualified clients"). (Exhibit 18(a) Santos Affidavit, ¶ 8). 8. A qualified "client" includes one household and all its members (and the
client's business if the client is a professional). (Exhibit 9, Vickie Sandve Depo., p. 52, lns. 15-24). II. Ms. Hutton and the Opt-Ins. 9. Ms. Hutton and the Opt-ins are some current and several former
employees of the Bank who have worked in Arizona and held the position of Client Manager in either the Premier Banking or Small Business Banking divisions of the Bank. (Exhibit 23, December 20, 2004 Order, p. 4-5, lns. 14-10). 10. Ms. Hutton was a Premier Client Manager. She left her employment with
the Bank on June 15, 2005. (Exhibit 10, Hutton Depo., p. 6, lns. 10-18). Ms. Hutton worked in the Scottsdale Market under the supervision of Carlos Machado until October, 2003. She then worked in that market until December, 2003 under the supervision of Vickie Sandve and transitioned to the newly formed West Valley Market where she was supervised until her resignation in June, 2005, by Frank Santos. (Exhibit 10, Hutton Depo, p. 26, lns. 7-21). 11. The conditional collective group is composed of the following 36
individuals. Their status is shown below as of March 1, 2002 or as soon thereafter as they were employed as Arizona Client Managers or on their last dates of employment if before.
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*Market
Associate Name
Job Title
Client Manager Start Date
Client Manager End Date
Premier Banking Arizona Markets
McGrory, Kathleen Premier Client Manager Premier Client Manager Premier Client Manager Premier Client Manager Premier Client Manager Premier Sr. Client Manager Premier Client Manager Premier Client Manager Premier Sr. Client Manager Premier Client Manager Premier Client Manager Premier Client Manager Premier Client Manager Premier Client Manager Premier Client Manager Premier Sr. Client Manager Premier Sr. Client Manager Premier Client Manager Premier Client Manager Premier Sr. Client Manager Premier Sr. Client Manager Premier Client Manager Premier Client Manager Premier Client Manager 01/01/01 02/01/01 08/16/97 03/19/01 01/01/97 06/11/01 01/01/04 07/01/02 07/16/98 11/01/00 11/16/96 03/17/03 03/26/01 05/17/04 07/01/02 05/01/99 11/01/96 10/01/00 03/22/99 07/01/03 11/01/96 02/01/98 10/01/01 10/16/00 3/1/2004 9/1/2005 8/25/2005 3/18/2004 11/30/2001 6/15/2005 3/14/2003 3/11/2005 6/9/2002 2/28/2002 6/9/2002 7/31/2003 5/20/2002 12/22/2004 4/15/2004 3/15/2002 Present 6/30/2005 6/15/2005 Present Present Present Present 4/16/2002
Tucson Premier Banking Market Managers: Debra Chandler 3/02-10/02 Grace Duval 10/02-6/05
Clark, Stephanie B Weaver, Sherry Dawson, Kirsten M Gonzales, Paula McClintic, Margaret E Burns, Karen Davis, Leeann J
Southwest Maricopa Premier Banking*
Vickie Sandve 3/02-10/03 Frank Santos (West Valley) 10/03-6/05 Kevin Hudson (East Valley) 10/03-12/04 Brad Larsen (East Valley) 12/04-6/05
Flamm-Stutenroth, Natalie Landis, Richard N Marquardt, Carrie Massignani, Barbara Rojas, Jennifer Halopoff, Peter Leal, Joaquin A Voytek, Tacy L
Scottsdale Premier Banking
Carlos Machado 3/02-10/03 Vickie Sandve 10/03-6/05
Simms, Charmion A Webster, Debra L Hutton, Kaye DeLong (Bradbury), Sherry Cooper, Julia L Staggs, Valorie R Roggenbuck, Diana C Lines, Gregory
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Market Manager:
Lynn Searles 3/02-6/05
Madison, Deborah L Jones, Duana Parsell, Gary Peterson, Janice L
Premier Client Manager Premier Client Manager Premier Client Manager Premier Client Manager
12/16/96 01/01/97 06/01/99 06/18/01
Present 4/30/2002 6/9/2002 4/24/2004
Small Business Banking Arizona Market
Bogdonas, Lynn R Griffiths, Robert Kelly, Larry Dean Krebsbach, Therese Larkin, Donna Lyftogt, Nancy Mohney, Robert Small Business Client Manager Small Bus. Sr. Client Manager Small Business Client Manager Small Business Client Manager Small Business Client Manager Small Bus. Sr. Client Manager Small Bus. Sr. Client Manager Small Business Client Manager Small Bus. Sr. Client Manager 1/16/2001 3/1/2002 11/16/2000 11/1/2000 7/16/1999 7/16/1999 3/16/2001 9/1/2001 7/16/1999 4/15/2002 1/15/2003 8/26/2002 3/31/2003 7/18/2002 3/22/2002 7/15/2002 6/15/2002 10/16/2003
13
Reilly, James
14
West, Michelle
15 16 17 18 19 20 21 22 23 24 25 26 27 28
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* The Southwest Maricopa County Market and Scottsdale Market were realigned in October, 2003 to form the Scottsdale Market, West Valley Market and East Valley Market.
(Exhibit 21, affidavit of Bree Bellefeuille, ¶ 4). 12. As of July 1, 2005, only the following 9 opt-ins remain employed by the
Bank as Premier Client Managers: 1. 2. 3. 4. 5. 6. 7. 8. 9. Julia Cooper Scottsdale Sherry DeLong (Bradbury) Scottsdale Deborah Madison (Hartney) Scottsdale Diana Roggenbuck Scottsdale Charmion Simms Scottsdale Valorie Staggs Scottsdale Stephanie Clark Tucson Kathleen McGrory Tucson Sherry Weaver Tucson
No Small Business Client Managers remained employed. (Exhibit 21, Bree Bellefeuille affidavit, ¶ 6).
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III.
As Designed and Trained For, the Primary Duty of the Client Manager Job, Relationship Management is Administrative in Nature. 13. The job description for a Client Manager reflects a job whose primary
duty is to manage the Bank's relationship with a portfolio of affluent clients, building a financial relationship of trust and confidence, the result of which is intended to be the selection of the Bank's products and services over those of its competition. (Exhibit 1, Affidavit of Steve Cortopassi, ¶ 3, Attachment A; Exhibit 6, affidavit of Patricia RocheFukushima, ¶ 3, Attachment A; Exhibit 15, Janice Peterson Depo. p. 63-64, lns. 17-3). 14. The training materials for the job confirm that the primary duties of the
job center on building a financial relationship of trust and confidence. For instance, the "CMP Roles at a Glance" notes the Client Management process disciplines to be: 1. 2. 3. 4. 5. Assess (developing client focus) Design (creating advisory value) Execute (creating value through expert execution) Inspect (ensuring client success and satisfaction) Celebrate (commemorating client services) The Success Profile
(Exhibit 22, Paola Tomassini Affidavit, ¶ 3, Attachment A).
utilized for recruiting of a Client Manager also reflects these relationship management duties. (Exhibit 22, Tomassini Affidavit, ¶ 4, Attachment B). 15. Ms. Hutton and Opt-in Julia Cooper admit these materials accurately
reflect the job of the Client Manager. (Exhibit 10, Hutton Depo., pp. 117-119, lns. 2016). Exhibit 19, Julia Cooper Depo., p. 41, lns. 7-24; pp. 61-62, lns. 19-8). 16. The curriculum taught at Client Manager University reflects the fact that
the duty of the Client Manager is relationship management. (Exhibit 22, Tomassini Affidavit, ¶ 5, Attachment C). 17. The clear goal of the Client Manager in managing the relationship is to
become the client's trusted financial advisor. (Exhibit 22, Tomassini Affidavit, ¶ 6, Attachment D; Exhibit 10, Hutton Depo. p. 98, lns. 14-24; Exhibit 19, Cooper Depo., pp. 56-57, lns. 20-12; Exhibit 15, Peterson Depo., pp. 70-71, lns. 14-9, p. 76, lns. 12-20;
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Exhibit 7, Krebsbach Depo. pp. 29-30, lns. 5-17). IV. Arizona Client Managers' Performance of their Primary Duty, Relationship management, was Administrative in Nature. 18. Competing financial institutions have the same products and services as
the Bank. (Exhibit 10, Hutton Depo, pp.62-63: 15-9, p. 99, lns. 11-15). 19. The Bank's strategy, therefore, is for the Client Manager to establish
herself as the point of contact between her clients and the Bank and manage the relationship so as to become the client's trusted financial advisor and advocate. (Exhibit 15, Peterson Depo. pp. 80-81, lns. 19-3 ("I was their central point of contact, their quarterback in the bank"; Exhibit 7, Krebsbach Depo. p. 42, lns. 5-22 ("You are an advocate for your client,"; Exhibit 3, Cortopassi Depo, pp. 62-63, lns. 4-18; Exhibit 11, Grace Duval Depo, p. 142, lns. 19-25; Exhibit 19, Cooper Depo, p. 64, lns. 2-11, pp. 6970, lns. 20-5; Exhibit 14, Margaret McClintic Depo., p. 50, lns. 7-12; Exhibit 15, Peterson Depo. pp. 67-68, lns. 10-25). 20. Clients appreciated this effort. As an example, Ms. Hutton testified that
she would receive "letters from clients that told me they appreciated . . . me and the work that I did." (Exhibit 10, Hutton Depo. pp. 35-36, lns. 12-22). 21. The theory is that the client will turn to the person the client trusts for
advice regarding, and as a result, acquisition of financial products and services. (Exhibit 10, Hutton Depo., p. 99, lns. 11-23; p. 113, lns. 11-17; pp. 135-136, lns. 11-10). 22. In order to successfully perform their job duty, Client Managers need to
have several years of experience with financial products and services. They must have broad knowledge of all types of commercial and personal credit, debit and investment vehicles, and of financial institutions and systems in order to formulate individual strategies that meets the goals and needs of their clients. (Exhibit 18(a), ¶ 11; Exhibit 10, Hutton Depo., pp. 61-62, lns. 17-2, p. 74, lns. 3-24, p. 91, lns. 1-21, p. 111, lns. 615; Exhibit 15; Peterson Depo. p. 62, lns. 11-22; Exhibit 7, Krebsbach Depo. p. 12, lns. 3-18). 23. Client Managers must keep abreast of evolving financial markets, grasp
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the subtleties of the market, become familiar with the needs and goals of their clients and respond quickly to the competition's efforts to win away the client. (Exhibit 18(a) Santos Affidavit, ¶ 11); Exhibit 10, Hutton Depo., pp. 103-104, lns. 21-11). 24. Although Small Business Banking Client Managers work for a different
banking group, report to a different chain of command, and advise their clients about different products and services than the Premier Client Managers (Exhibit 4, RocheFukushima Depo., pp. 13-14, lns. 3-3), Small Business Banking Client Managers have the same primary duty as Premier Client Managers manage and develop the relationship, becoming the Bank's point of contact with the client and becoming the client's trusted financial adviser. (Exhibit 18(f), Beccue Affidavit, ¶¶ 5, 8; Exhibit 7, Krebsbach Depo. p. 28, lns. 3-7). 25. The key to the success of a Client Manager is to market herself as the
single point of contact for the Bank in order to deepen the financial relationship between her clients and the Bank. (Exhibit 18(a), Santos Affidavit ¶ 10; Exhibit 12, Carlos Machado Depo, p. 30-31, lns. 24-5). For example, Ms. Hutton was very successful in her own right. She testified that she had more than $187 million in client assets under her management. (Exhibit 10, Hutton Depo., p. 28, lns. 1-15). 26. Client Managers assist their clients with all of their financial needs,
ranging from financial planning to basic banking services. (Exhibit 10, Hutton Depo., p. 93, lns. 1-21). Client Managers utilize research, planning and promotional activities to establish their clients' confidence and to understand the goals and financial needs of their clients. (Exhibit 19, Cooper Depo., p. 44, lns. 7-9, pp. 60-61, lns. 18-4, pp. 62-63, lns. 18-13, p. 70, lns. 17-22; Exhibit 14, McClintic Depo. p. 54, lns. 1-11; Exhibit 10, Hutton Depo., pp. 116-117, ln. 4-19). This includes collecting and analyzing (Exhibit 7,
information about a client's income, assets, investments and debts.
Krebsbach Depo. pp. 33-36, lns. 18-14; Exhibit 19, Cooper Depo., pp. 57-58, lns. 16-8; Exhibit 15, Peterson Depo. pp. 66-67, lns. 6-8, pp. 71-72, lns. 16-25; Exhibit 18(a), Santos Affidavit, ¶ 9).
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27.
Client Managers, considering their clients' accounts, track financial trends
and key market indicators such as interest rates and competitor practices that impact these accounts. If a client's account is impacted by a market change, the Client
Manager should proactively confer with the client and suggest an individualized response. (Exhibit 18(a), Santos Affidavit, ¶ 9). 28. Even when there is no activity impacting an account, Client Managers
maintain regular contact with their clients. (Exhibit 19, Cooper Depo., p. 63, lns. 16-25; Exhibit 10, Hutton Depo., pp. 123-124, lns. 24-8; Exhibit 15, Peterson Depo. p. 89, lns. 10-24). The purpose of this continued contact is to foster a long-term relationship between the client and the Bank despite fierce competition from other financial institutions. (Exhibit 18(a), Santos Affidavit, ¶ 9; Exhibit 15, Peterson Depo. pp. 89-90, lns. 25-15; Exhibit 7, Krebsbach Depo. pp. 45-46, lns. 17-11.) 29. When determining the appropriate financial strategy for a client, the Client
Manager must consider all relevant alternatives in light of the client's financial situation and intentions regarding the transaction and then suggest the appropriate alternatives. (Exhibit 10, Hutton Depo. p. 138, lns. 4-15). Based on their assessment or "diagnosis" of their client's financial needs and goals, Client Managers introduce the client to Bank products or services that meet those specific needs. (Exhibit 18(a), Santos Affidavit, ¶¶ 8-10; Exhibit 19, Hutton Depo., pp. 59-61, lns. 18-6, pp. 64-66, lns. 21-1, pp. 66-67, lns. 25-14, pp. 78-79, lns. 15-4, pp. 79-80, lns. 20-25; Exhibit 15, Peterson Depo. pp. 73-75, lns. 20-7). 30. Given the duty of relationship management, it is understandable that a
Client Manager who focuses on selling, for instance, selling a client an unnecessary product or service to make one sale, but loses the client's trust and, ultimately, the relationship is acting contrary to the Bank's interest and instructions and is not satisfactorily performing the job. (Exhibit 3, Cortopassi Depo., pp. 71-72, lns. 10-18; Exhibit 15, Peterson Depo. pp. 70-71, lns. 24-15).
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V.
The Exercise of Discretion and Independent Judgment is Commonplace. 31. Client Managers exercise a substantial amount of discretion and
independent judgment. They decide which clients to talk to, how to approach the clients, and what information should be obtained from the clients to best determine their needs and goals. (Exhibit 18(a), Santos Affidavit, ¶ 12; Exhibit 14, McClintic Depo. p. 54, lns. 12-19; Exhibit 10, Hutton Depo., pp. 114-115, lns. 4-3, pp. 126-127, lns. 18-14; Exhibit 7, Krebsbach Depo. pp. 44-45, lns. 21-8.) 32. Client Managers also exercise discretion regarding which, if any, Bank
products they present to clients. Client Managers must analyze the client's goals and needs and recommend the right product. (Exhibit 18(a), Santos Affidavit, ¶ 13; Exhibit 10, Hutton Depo, p. 61, lns. 7-16, pp. 63-64, lns. 11-6, pp. 75-76, lns. 21-5; Exhibit 7, Krebsbach Depo. p. 38, lns. 3-16.) 33. The day-to-day management of the relationship involves highly
discretionary decisions by the Client Manager. For example, it is routine for Client Managers to overrule Bank guidelines and the decisions of tellers and other Bank associates, and instruct these associates to pay checks for which there are insufficient funds. (Exhibit 10, Hutton Depo. p. 185, lns. 11-4; Exhibit 19, Cooper Depo. p. 64, lns. 15-21). These overdraft decisions have been in substantial amounts of several thousand dollars. (Exhibit 13, June, 2006, Vickie Sandve Affidavit, ¶ 3, Attachment A). 34. Client Managers also have the authority to remove holds on checks and
have done so in amounts as much as several thousand dollars placed by other Bank associates in accordance with the Bank rules. (Exhibit 19, Cooper Depo., pp. 65-66, lns. 22-8; Exhibit 13, Sandve Affidavit, ¶ 4); Exhibit 10, Hutton Depo., pp. 140-141, lns. 18-3, p. 142, lns. 10-21.) 35. Other examples of the discretion often exercised by Client Managers
include making wire transfers with no written order and initiating transactions or verbal on telephone instructions prior to the Bank's receipt of written permission by the client. (Exhibit 13, Sandve Affidavit, ¶ 5; Exhibit 10, Hutton Depo., pp. 145-146, lns. 21-6.)
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36.
Client Managers also exercise discretion and independent judgment
regarding the financial terms they offer to their clients. For example, a Client Manager can increase the interest rate on certificates of deposit offered to clients from as much as 10 basis points to a quarter of a percent, can waive fees on check orders, and can waive overdraft fees. (Exhibit 5, Searles depo. 69-71, lns. 5-16; Exhibit 12, Machado Depo., pp. 102-104, lns. 20-22, pp. 107-108, lns. 20-20.) 37. Client Managers also have the discretion to appeal an Underwriting
Department turn-down of a request for credit by advocating an exception through their Market Manager. (Exhibit 10, Hutton Depo. p. 183, lns. 6-16.) While some Client Managers never pursue such an exception, others do it in a substantial number of their loans. (Exhibit 13, Sandve Affidavit, ¶ 6). 38. Client Managers can also waive certain fees for Bank products such as
loan origination fees in amounts up to $250. (Exhibit 9, Sandve Depo., pp. 61-62, lns. 16-25.) 39. The Bank's Premier Relationship Center ("PRC") located in Tempe,
Arizona exists solely to assist Premier Client Managers with their workloads. The PRC is staffed by individuals who are trained to answer client calls and perform routine functions for Client Managers. (Exhibit 3, Cortopassi Depo., p. 166, lns. 18-25). 40. Premier Client Managers can delegate many of their routine duties and
tasks to employees at the PRC. (Exhibit 19, Cooper Depo., pp. 53-55, lns. 21-3; Exhibit 14, McClintic Depo. pp. 55-56, lns. 8-6.) Thus the Client Manager can significantly reduce her workload by utilizing the PRC to perform a number of routine tasks. (Exhibit 3, Cortopassi Depo., p. 158, lns. 5-21.) 41. In contrast, to accomplish the same workload reduction, Small Business
Client Managers have their own assistants, in their same offices. (Exhibit 7, Krebsbach Depo. p. 44, lns. 4-12; Exhibit 5, Searles Depo. pp. 99-100, lns. 3-1.) 42. Client Managers work relatively free from supervision. (Exhibit 19,
Cooper Depo., pp. 47-48, lns. 4-2, p. 49, lns. 11-19). While Client Managers report to a
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Market Manager, they generally only interact with the Market Manager about once a week. (Exhibit 10, Hutton Depo., p. 128, lns. 12-23; Exhibit 14, McClintic Depo. pp. 23-25, lns. 8-25.) They essentially control their own hours and location of work, a characteristic of the position that attracts many Client Managers to the job. (Exhibit 19, Cooper Depo., pp. 68-69, lns. 23-5; Exhibit 18(a), Santos Affidavit, ¶ 4; Exhibit 18(b) Vickie Sandve Affidavit, ¶ 3; Exhibit 10, Hutton Depo., pp. 134-135, lns. 21-3.) 43. Because of the skills required to perform this job, Client Managers receive
a high salary, plus the potential for a large incentive bonus, resulting in annual compensation in the range of $62,500 to over $100,000. (Exhibit 10, Hutton Depo., pp. 43-46, lns. 11-25; Exhibit 14, McClintic Depo., p. 44, lns. 8-20, p. 48, lns. 15-23; Exhibit 19, Cooper Depo., pp. 34-35, lns. 17-6). VI. March 2002 Reclassification Of The Client Manager Position. 44. Prior to March 2002, the Client Manager position was classified as,
exempt from the overtime requirements of the FLSA. Client Managers were paid on a salary basis and received the same amount of compensation regardless of variations in the quality of their work, or the number of hours which they worked. (Exhibit 14, McClintic Depo., pp. 45-47, lns. 18-6; Exhibit 15, Peterson Depo., p. 40, lns. 2-25). 45. Client Managers did not have their pay docked for partial day absences
during the time period they were classified as exempt. (Exhibit 13, Sandve Affidavit, ¶ 8). 46. Effective March 1, 2002, the Bank reclassified the Premier and Small
Business Client Manager positions from exempt to overtime eligible. (Exhibit 2, Reale Depo., p. 40, lns. 9-14; Exhibit 3, Cortopassi Depo., p. 27, lns. 20-24). 47. This decision as it relates to Arizona, was made by Mark Reale, Personnel
Executive for Premier Bank and Liz Ferrer, Personnel Executive for the Small Business Bank, in the Fall of 2001. (Exhibit 2, Reale Depo., pp. 52-53, lns. 17-21). 48. There is no evidence that any court or administrative agency has
concluded or even contended that Client Managers are non-exempt, or that competitors'
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counterparts are non-exempt. 49. The Bank's management always has believed Client Managers are exempt
within the FLSA. (Exhibit 2, Reale Depo., p. 40, lns. 15-23; pp.102-103, lns. 4-12). 50. In 1999, class actions were filed in California claiming the Client
Manager position and other positions were non-exempt under California law. Susanne Watson, Personnel Manager for the California Consumer and Commercial Bank division until August, 2001, managed the suit. She reported to John Harris, Personnel Executive for the Consumer and Commercial Group. Jay Price was the in-house Bank attorney involved in over seeing the defense of these class actions. (Exhibit 2, Reale Depo, p. 45, lns. 3-24, p. 49, lns. 1-20.) 51. Following his one day trip at the request of Jay Price to Seattle, where he
interviewed a Market Manager and a few Premier Client Managers, Lloyd Aubry, an expert on California Wage and Hour law, advised Mr. Price that the Client Manager job, as designed and intended was exempt. (Exhibit 16, Lloyd Aubry Depo., p. 125, lns. 1424). This confirmed the views of the Bank's management noted above. 52. Mr. Aubry also advised Mr. Price that: a) The job is performed by at least some client managers emphasizing sales too much, causing them to perhaps perform the job in a non-exempt manner at least under California law. b) Wage and Hour class actions are the lawsuit du jour of the day in California and elsewhere. c) Therefore, the Bank may want to: 1) More closely monitor job performance to assure exempt performance, 2) Modify the job; or 3) Avoid continuous litigation by making Client Managers overtime eligible. (Exhibit 16, Aubry Depo. p. 140, lns. 13-21, Exhibit 15, ¶¶ 8, 10-15.) 53. These concerns raised more of a training issue than a classification issue.
Since relationship management was the crux of the Bank's strategy to beat competition, that aspect of the position was key to the success of the strategy and would not be abandoned. The Bank had been improving its training and behavior analysis for
recruiting specifically to better focus Client Managers on relationship management, that
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is relationship focused rather than product focused, and to understand that a strong relationship founded on financial trust and confidence would naturally result in the client selecting more and more Bank products and services over its competitors. Therefore, reclassification was not needed. (Exhibit 8, Affidavit of Jay Price, Esq, ¶5; Exhibit 6, Roche-Fukushima Affidavit, ¶¶ 4-8). 54. In March, 2001, a California Court of Appeals applied the "production/
administrative dichotomy test" to a job in the insurance industry in Bell v. Farmer Insurance Exchange, 87 Cal. App. 4th 805 (Cal. App. 2001), rev. denied June 20, 2001. The same reasoning could be applied to banks. Exhibit 8, Price Affidavit. 55. A great deal of commentary circulated concerning the wage and hour
litigation threat to business after the Bell decision. (Exhibit 24, Contra Costa Times article 6/29/01; San Diego Union-Tribune article July 12, 2001). 56. About May 1, 2001, Ken Lewis became CEO of the Bank. He set as a
goal, 8 conservative quarters of meeting or exceeding expectations, asking that expenses become predictable. Litigation expense is not predictable. He also expressed
displeasure with seeing the Bank's name in the news as an employer whose associates sue. (Exhibit 2, Reale Depo., pp. 66-67, lns. 6-9). 57. In July, 2001, the California class actions were successfully mediated.
(Exhibit 2, Reale Depo., pp. 36-37, lns. 21-9). 58. About August 1, 2001, the Bank was realigned from a geographic basis to
a business unit basis. In the personnel function, John Harris remained responsible for the Consumer and Commercial Banking Group. Ms. Watson took the Consumer Bank nationally; Ms. Ferrer took the Small Business Bank nationally, and Mr. Reale took the Premier Bank nationally. These Personnel Executives reported to Mr. Harris. Mr. Harris reported to Steele Alpin, the Bank's Personnel Director. With realignment, the Six Sigma concept became prevalent, including the concept that variability is your enemy. (Exhibit 25, Reale Affidavit, ¶4). 59. In the fall of 2001, about 50% of all Client Managers were located in
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California. Mr. Reale understandably believed the legal landscape was moving against employers in California wage and hour litigation. Therefore, he accepted the proposal that California Premier Banking Client Managers be converted to overtime eligible status to avoid ongoing expensive litigation. Ms. Ferrer made the same decision for Small Business Client Managers. (Exhibit 2, Reale Depo., pp. 52-53, lns. 2-12; pp. 9899, lns. 23-14; p. 100, lns. 8-23). 60. Mr. Reale and Ms. Ferrer could have blocked conversion outside of
California, but for system consistency and simplicity, they decided in late September 2001, to convert nationwide. Therefore, Arizona Client Managers was converted to overtime eligible. All managers nevertheless continued to believe the job was exempt. (Exhibit 2, Reale Depo., p. 55, lns. 4-12; pp. 50-51, lns. 11-10.) 61. At the Personnel Executive level, implementation started in the sense that
issues were identified. Consideration was give to how the conversion would impact Client Manager moral since Client Manager's considered themselves professionals. Also, budget issues needed to be addressed. (Exhibit 25, Reale Affidavit, ¶5; Exhibit 3, Cortopassi Depo., p. 43, lns. 6-16). 62. The target conversion date was delayed, reasonably, to March 1, 2002 due
to the pending payroll system conversion to Exault. (Exhibit 2, Reale Depo., pp. 101102, lns. 19-6). 63. In December, 2001, yet another reorganization occurred. Ms. Ferrer
became Personnel Executive for Premier Banking and Mr. Reale moved to another job. Ms. Watson, who intended to retire about at this time, was placed in charge of implementation. A working team was convened in or before December, 2001. The working team prepared an implementation schedule. (Exhibit 4, Roche-Fukushima Depo., pp. 26-27, lns. 20-24; Exhibit 25, Reale Affidavit., ¶6). 64. Ms. Roche-Fukushima was on the working team and recalls being
informed of the decision to convert during a conference call to working team members in late 2001 or early 2002. She recalls that Ms. Watson told the group of the decision,
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attributing the decision to Mr. Aplin. (Exhibit 4, Roche-Fukushima Depo., pp.70-72, lns. 19-36). 65. Mr. Reale explained that the attribution of this decision to Mr. Alphin
likely was because he is ultimately responsible for all personnel decisions as the highest personnel officer of the Bank, and because attribution to him would reduce second guesses. (Exhibit 2, Reale Depo., pp. 122-124, lns. 18-11). 66. John Morton, President of Premier Banking, advised the Premier Banking
management group of the conversion via a February, 2002, Knowledge Channel Broadcast. He had learned of the conversion decision in the fourth quarter of 2001. In the Broadcast, he stated he believed the conversion was "exactly the right thing for our company." In Interrogatory Responses, Mr. Morton explained his statement: (i) I was told there was uncertainty around the definitions of the law regarding exempt/non-exempt status at least in California and that we had just settled costly litigation there. I agreed it was the most prudent choice to make all Client Managers overtime eligible for system continuity and to avoid costly litigation.
Mr. Morton also said the potential risks facing the Bank included "some problems in managing the actual overtime expense that we have budgeted for this year." explained the comment in his Interrogatory Responses: (i) The comment was designed toward concern about administrative inefficiencies. There was no prior system or procedure in place to capture and report actual overtime or to manage overtime expense. He
(See Morton Interrogatory Responses Nos. 2-3, dated March 27, 2006, attached as Exhibit 17). 67. There was no change in the duties and responsibilities of the Client
Managers following the March 2002 reclassification. (Exhibit 3, Cortopassi Depo., pp. 43-45, lns. 23-12.) VII. Subsequent to March 2002 Client Managers Were Repeatedly Advised Of The Bank's Requirement That They Record All Their Hours Of Work. 68. By early 2002, the Bank had developed a formal program to implement
the reclassification of Client Managers from exempt to overtime eligible. Briefings were held, and talking points and tips were distributed to ensure implementation of the
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reclassification. These talking points and tips clearly state that, "[w]hen a position is classified as overtime eligible (non-exempt), all associates in that position are required to be paid overtime pay for time worked over the state or federal requirement." ((Exhibit 3, Cortopassi Depo, p.12, lns. 6-13; Exhibit 4 Roche-Fukushima Depo, Exh. 3-4). 69. The Overtime-Eligibility Guide for Associates notes (a) "accurate
reporting of hours worked is required," and (b) "double-check all information on the timesheet to make sure it is accurate." (Exhibit 13, Sandve Affidavit ¶¶ 9, Attachment B). 70. In March 2002, Market Managers held meetings in each market to instruct
Client Managers on how to complete time cards and keep track of their hours of work. (Exhibit 4, Roche-Fukushima Depo, Exh. 4). 71. Small Business Market Manager Lynn Searles "rolled out" the conversion
to overtime eligibility to her Client Managers in accordance with the Bank's policy. (Exhibit 5, Searles Depo. p. 61, lns. 16-19). 72. Following the reclassification, Bank executives met with Market
Managers and stressed with them the need to ensure that Client Managers were preparing their timesheets accurately and were being appropriately compensated for all hours of work in excess of 40 in a workweek. (Exhibit 3, Cortopassi Depo, p. 48, lns. 11-20, p. 154-155, lns. 7-2, Exhibit 2). 73. Steve Cortopassi, then the Regional Executive responsible for Premier
Banking in Arizona, met with Client Managers a number of times to emphasize that they needed to record all of their overtime hours worked. In an effort to stress the need for Client Managers to record all hours of work, Mr. Cortopassi advised them that "[y]ou've got to sign for your overtime. I don't like stripes, and I don't like bread and water." (Exhibit 3, Cortopassi Depo, p. 155, lns. 3-19). 74. At the time of the reclassification of the Client Manager position and
periodically thereafter, Client Managers also received reminders on the need to record
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all hours worked on their timesheets, including overtime hours. For instance, Frank Santos (Ms. Hutton's Market Manager after December, 2003) made clear that each Client Manager was responsible for recording all hours worked, and that the Bank would rely on the submitted timesheets when calculating Client Manager compensation. (Exhibit 18(a), Santos Affidavit, ¶ 14). Carlos Machado (Ms. Hutton's Market Manager from the March 2002 to October, 2003), met with his Client Managers to emphasize the need to accurately complete timesheets. (Exhibit 12, Machado Depo, p. 67-68, lns. 2324). 75. The timesheets filled out and signed by the Client Managers specifically
state, "I understand that I am responsible for accurately reporting all time worked, including any overtime, and that my failure to do so may result in disciplinary action. I certify that the above is an accurate record of time worked during this period." (Exhibit 14, McClintic Depo, p. 31-32, lns. 25-5, Exh. 8). 76. The Bank also held Associate Listening Sessions in order to help Client
Managers adjust to completing timesheets and tracking their hours of work. (Exhibit 4, Roche-Fukushima Depo, pp. 83, lns. 7-23, Exh. 4). 77. The contents of the Bank's "Q & A" documents regarding the conversion
were brought to the Client Managers' attention and emphasized that Client Managers needed to record all hours of work: When your position is reclassified as eligible for overtime pay, you are required to receive overtime pay for time worked beyond 40 hours in a workweek. In order to receive accurate payment for time worked, you must keep track of your work hours. Generally, you will do this by completing a timesheet. Training will be provided to fill out your timesheet. (Exhibit 13, Sandve Affidavit ¶ 10). 78. The Bank's Associate Handbooks also instructed Client Managers that
they were required to record all overtime hours and accurately complete their timesheets. For example, the Bank's 2002 Associate Handbook, provides: If you are an overtime-eligible associate, you are expected to record the hours you work on a timesheet or other
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company approved time record or timekeeping system. This reporting is required to satisfy state and federal laws and to ensure that you are properly paid. You are expected to record daily time worked accurately and truthfully. You should report all time spent doing work for the company, including work at home. (Exhibit 10, Hutton Depo, p. 161, lns. 6-14 Exhibit 13). Vicki Sandve (Ms. Hutton's Market Manager the last few months of 2003) enforced this requirement. (Exhibit 9, Sandve Depo, pp. 79-81, lns. 11-25). 79. There were no unwritten policies or plans in contravention of, or intended
to subvert, the requirement that Client Managers were to record and receive overtime compensation for all hours worked in excess of 40 in a workweek. The Arizona Market Managers during the relevant time period have testified, under oath, that there were absolutely no unwritten or tacit policies to encourage Client Managers to work "off the clock." (Exhibit 23, December 20, 2004 Order, p. 7: 2-51; Exhibit 5, Searles Depo. pp. 110-112, lns. 18-2; See Original Market Manager Affidavits attached as Exhibit 18(a), (b), (c), (d)). 80. Neither Mr. Cortopassi nor the Market Managers sent any message to the
Client Managers that could be interpreted as a message that they should work more hours than they actually recorded. (Exhibit 3, Cortopassi Depo, p. 161, lns. 10-18; see Original Client Manager Affidavits attached as Exhibit 18(a), (b), (c), (d)). 81. If a Market Manager had pressured a Client Manager to work off the clock
or to not record all overtime hours worked, this conduct would have been unacceptable to the Bank and the Market Manager who engaged in this type of misconduct would be disciplined and potentially terminated. (Exhibit 3, Cortopassi Depo, pp. 161-162, lns. 19-3). 82. record them: Q: Has anybody in the management of the bank ever told you to work hours and not record them? A: Not in those words.
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Ms. Hutton admits she was never told by anyone to work hours and not
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Q: Has anybody presented you with a document that told you to work hours and not record them? A: No.
Q: Was there a rule that [market manager] Vicki Sandve imposed that said you can only work four hours of overtime a week, or was it that you can only work four hours of overtime without my permission a week? MS. JONES: Objection to form. A: If you reported more than four hours of overtime in a week, you needed to get prior approval for that. Q: Did the administrative assistant that worked with Vicki ever tell you to work hours and not report them? A: No.
(Exhibit 10, Hutton Depo, p. 157, lns. 8-25). 83. The Opt-ins deposed admit they were told to record all hours worked,
including overtime hours: Q: Has she [market manager Grace Duvall] told you since that time either in a group meeting or individually that you are to record all of the overtime hours that you work? MS. JONES: Objection, form and foundation. A: Yes.
Q: And do you have a specific recollection as to when she told you that? A: No, I don't. Probably when she first came on board . . . I believe it was sometime in 2002. (Exhibit 14, McClintic Depo, p. 8, lns. 5-15). Q: Were you told by anyone at the bank that you were to record all of the hours you worked? MS. JONES: Objection, foundation and form. A: I was told to write down my hours that I worked, correct. ... A: He [market manager Frank Santos] said to start filling out timesheets and to record overtime if we worked it. (Exhibit 15, Peterson Depo, pp. 47-48, lns. 17-18; p. 49, lns. 3-12).
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84.
Individual Market Managers may have instructed Client Managers not to
work overtime hours, i.e., to only work 40 hours in a workweek. Individual Market Managers may have instructed Client Managers to limit their overtime hours worked to a certain number per week. Despite any such instructions, if a Premier Client Manager worked overtime hours and submitted a timesheet reflecting those hours, they were paid for those hours. (Exhibit 3, Cortopassi Depo, pp. 49-50, lns. 20-6). For example, Market Manager Grace Duval asked the Client Managers reporting to her to let her know in advance if they were going to work any overtime hours. (Exhibit 14,
McClintic Depo. p. 30, lns. 10-14). Market Managers Vickie Sandve and Frank Santos asked that Client Managers obtain prior approval before working more than four or five hours of overtime in a week. In contrast, Market Manager Carlos Machado did not require Client Managers to obtain prior approval before working overtime hours. (Exhibit 10, Hutton Depo, p. 157, lns. 14-21; Exhibit 15, Peterson Depo, p. 49, lns. 1421; Exhibit 9, Sandve Depo, p. 56, lns. 20-25; Exhibit 12, Machado Depo, pp. 77-78, lns. 14-3). 85. Arizona Small Business Market Manager Ms. Searles simply wanted the
Client Managers to keep her abreast of the general number of hours of overtime which they were working each week so she could ensure that they were not overworked. Nevertheless, Small Business Client Managers were paid for all overtime hours which they recorded. (Exhibit 5, Searles Depo. p. 111, lns. 4-14). 86. Ms. Searles testified that "[m]y statement has always been if you are
working on behalf of the Bank, document it." (Exhibit 5, Searles Depo. p. 112, lns. 1213). 87. Small Business Opt-in Therese Krebsbach confirmed that when questions
about recording overtime were raised in Ms. Searles' presence "she [Lynn] would read the corporate statement." (Exhibit 7, Krebsbach Depo. pp. 71-72, lns. 21-1). 88. Opt-in Janice Peterson alleges that Mr. Machado's unwritten policy
regarding overtime was that he allotted a certain number of overtime hours per Client
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Manager, but "he wouldn't have a problem going over budget if we were producing." (Exhibit 15, Peterson Depo. pp. 92-93, lns. 15-3). 89. Ms. Hutton admitted that if they testified truthfully, every Client Manager
would say "we were told there was a budget constraint on overtime and we were not allowed to go over four hours a week without prior approval." (Exhibit 10, Hutton Depo, p. 160, lns. 12-24). 90. The Opt-ins from whom individual discovery has been permitted by
Plaintiff's counsel admit they did report overtime, often in excess of four or five hours in a given week, and that they were always paid for every hour of overtime which they recorded. (Exhibit 10, Hutton Depo, pp. 155, 6-17; Exhibit 14, McClintic Depo, p. 30, lns. 15-19; Exhibit 15, Peterson Depo, p. 34, lns. 17-25, p. 37, lns. 1-8. 91. For example, although Ms. Hutton claims she was told by Market
Manager Vickie Sandve, that Client Managers should not work holidays without prior approval, Ms. Hutton admits that she did turn in hours for holiday work and was paid for that time. (Exhibit 10, Hutton Depo, p. 155, lns. 6-17). 92. Opt-in McClintic concedes Market Manager Grace Duval never refused a
request to work overtime, but rather claims Duval led her to believe by doing so she was taking overtime away from the other Client Managers. (Exhibit 14, McClintic Depo. pp. 56, lns. 7-17). Ms. Duval disputes the latter allegation. (Exhibit 11, Duval Depo. pp. 216, ln. 22 pp. 219, ln. 22). 93. Market Managers also confirmed that Client Managers were paid for all
overtime hours which they worked. For example, Mr. Machado testified that even if a Client Manager was inefficient and worked 60 hours per week, the Client Manager would be paid for 20 hours of overtime. (Exhibit 12, Machado Depo, p. 67, lns. 11-17). 94. Premier Market Managers did not have any difficulty with overtime
expenses in their budget. (Exhibit 3, Cortopassi Depo, p. 58, lns. 15-20). 95. The Arizona Small Business Market Manager, Ms. Searles testified she
was "never held accountable" for exceeding any budget for overtime and that she did
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not even pay that much attention to her overtime budget. (Exhibit 5, Searles Depo., pp. 62-65, lns. 25-1). 96. The Premier Market Managers' supervisor, Ms. Cortopassi, did not
instruct them that they needed to reduce their overtime expense for Client Managers. (Exhibit 9, Sandve Depo, p. 52, lns. 9-14). 97. Client Managers were not evaluated on the basis of whether or not they
worked overtime hours. (Exhibit 3, Cortopassi Depo, p. 145, lns. 11-18). VIII. The Bank Had No Knowledge That Certain Opt-Ins Were Not Recording Some Overtime Hours, If Such Was the Case. 98. The Bank was not aware that certain Opt-ins may have been reluctant to
record all of their overtime hours if such was the case. (Exhibit 3, Cortopassi Depo, pp. 47-48, lns. 8-10). 99. Opt-in Margaret McClintic claims she did not record all of her overtime
hours, but felt justified in not doing so because the Bank's incentive pay plan for Client Managers was generous enough to make working overtime hours worthwhile, not because she was led to believe she should not record this time. (Exhibit 14, McClintic Depo, pp. 43-44, lns. 20-7). 100. Opt-in Julia L. Cooper ("Cooper") has waived any claim to overtime
following the reclassification of the Client Manager position to overtime eligible in March 2002. (Exhibit 19, Cooper Depo, p. 7, lns. 7-9, p. 15, lns. 6-11). Plaintiff's counsel even repeatedly instructed Ms. Cooper not to answer any questions regarding this time period. (Exhibit 19, Cooper Depo. pp. 16-21; lns. 8-3). 101. Opt-in Janice Peterson ("Peterson") claims that she "may" have worked
some overtime hours for social events, training trips or Saturday projects which she did not record, but she admits she has no way of even estimating the number of those hours. (Exhibit 15, Peterson Depo, pp. 28-30, lns. 15-16, p. 35, lns.10-17). 102. Ms. Peterson also claims that at times she recorded a lunch break on her
timesheet when she actually worked through lunch because an administrative assistant, Sandy Guthrie, allegedly told her that her timesheets needed to show a lunch hour.
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However, Peterson admits that her Market Manager told her that she needed to record all of her hours of work. (Exhibit 15, Peterson Depo, pp. 43-44, lns. 25-1, p. 47, lns. 1521). 103. Sandra Guthrie encouraged Client Managers to take lunch breaks to
"recharge themselves" but they were not required to do so. All Client Managers with whom she worked were paid for all time recorded. (See October 27, 2005 affidavit of Sandra Guthrie attached hereto as Exhibit 20, ¶ 4). 104. There is no evidence that the Bank received an internal complaint that
Client Managers were being forced to work overtime hours for which they were not being paid. a. For example, Ms. Hutton never contacted the Bank's Personnel
Department to allege that she was being forced to work overtime hours but not record them. Similarly, Ms. Hutton never complained to a Market Manager that she allegedly was not being paid for all the overtime hours she worked. (Exhibit 10, Hutton Depo, p. 161, lns. 15-24, p. 164, lns. 20-22). 105. A review of the overtime records of each opt-in between March 2002 and
June 2005 demonstrates that there is no consistency in the number of overtime hours which these individuals recorded. Some Client Managers recorded absolutely no
overtime, others recorded a few hours on a sporadic basis and others recorded between 5 and 20 hours a week. (Exhibit 21, Bellefeuille Affidavit ¶ 3). 106. Even Ms. Hutton concedes that at certain times she did report all of her
overtime hours. (Exhibit 10, Hutton Depo. pp. 166, lns. 2-16). IX. With One Isolated Exception, No Docking Occurred. 107. One Client Manager, Sherry Weaver ("Weaver") had her pay docked for
about 5 hours in 2 or 3 pay periods from the October to December, 2003 (Client Managers were overtime eligible when this docking occurred). (Exhibit 21, Bellefeuille Affidavit, ¶ 6(c)). 108. Mr. Cooper assumed that if a Client Manager exceeded his or her allotted
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sick and vacation days, the Client Manager's pay would be docked. However, no one at the Bank told her this was the case and her pay was never actually docked. (Exhibit 19, Cooper Depo, pp. 76-79, lns. 8-3). 109. Ms. McClintic claims that she was told that if she took extra vacation days
beyond her allotted vacation time, she would not be paid for this time. Ms. McClintic never actually exceeded her allotted vacation and sick days. (Exhibit 14, McClintic Depo, p. 81, lns. 8-25, p. 82-83, lns. 10-2). 110. Ms. Peterson never had her pay docked. (Exhibit 15, Peterson Depo,
p. 40, lns. 23-25). X. July 2005 Reclassification. 111. In July 2005, the Premier Client Managers were reclassified back to
exempt. (Exhibit 25, Reale Affidavit, ¶ 7). 112. Small Business Client Managers were re-classified back to exempt in
April 2005. (Exhibit 25, Reale Affidavit, ¶8.) Dated this 26th day of June, 2006. RYLEY CARLOCK & APPLEWHITE
By /s/Charles L. Chester Charles L. Chester Carolann E. Cervetti John M. Fry One North Central Avenue, Suite 1200 Phoenix, Arizona 85004-4417 Attorneys for Defendants
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CERTIFICATE OF SERVICE I hereby certify that on June 26th, 2006, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electron Filing to the following CM/ECF registrants: Ms. Lydia A. Jones ROGERS & THEOBALD, LLP 2425 East Camelback Road Phoenix, Arizona 85016 Attorneys for Plaintiff Michael O'Connor Jennings, Strouss & Salmon, P.L.C. The Collier Center, 11th Floor 201 E. Washington Street Phoenix, AZ 85004 /s/Bree Bellefeuille An employee of Ryley, Carlock & Applewhite
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