Free Motion for Miscellaneous Relief - 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. I. Introduction Plaintiff, on behalf of herself and the collective opt-ins, moves 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). 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 Subsequent discovery since the Court Order has further confirmed willfulness, thus making it appropriate for this Court to make a final finding of willfulness and among other things extend the statute of limitations to three years.2
See Court Order dated November 9, 2005; See Transcript of Oral Argument at p. 4 attached as Exhibit A. 2 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
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No. CV2003-2262-PHX-ROS Plaintiff's Motion for a Final Finding of Willfulness Under The Fair Labor Standards Act

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II.

Legal Standard for Establishing Willfulness Under the FLSA, employees are entitled to recover overtime compensation

earned during the three years prior to filing a complaint if the employer willfully violated the FLSA's overtime provision.3 In 1988, the United States Supreme Court

held that willfulness exists if the employer "knew" that its conduct violated the FLSA or "recklessly disregarded" that fact.4 Under the Code of Federal Regulations,

"willfulness" exists if the employer "knew" that its conduct violated the FLSA or "recklessly disregarded" that fact.5 An employer has "knowledge" that its conduct violated the FLSA when "the employer received advice from a reasonable official of the wage and hour division to the effect that the conduct in question is not lawful."6 Relatedly, an employer has "knowledge" of FLSA requirements when it has previously defended against private and government FLSA lawsuits.7 An employer "recklessly disregards" the fact that its conduct may violate the FLSA when "the employer should have inquired further into whether its conduct was in compliance with the Act and failed to make adequate further inquiry."8 In making a determination of willfulness, all facts and

finding of willfulness, plaintiff be allowed to supplement this record with the notes, assuming, of course, that the Court orders their disclosure. 3 See 29 U.S.C. §255(a). 4 See McLaughlin v. Richland, 486 U.S. 128, 133 (1988). 5 See 29 CFR 578.3(c)(1). 6 See 29 CFR 578.3(c)(2). 7 See Donovan v. Sabine Irrigation Company, Inc., 531 F. Supp. 923 (W.D. LA 1981). Although Donovan was decided prior to McLaughlin, it is instructive on the issue of "knowledge." 8 See 29 CFR 578.3(c)(3).

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circumstances surrounding the alleged violations should be considered.9

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This Circuit and this District have also followed McLaughlin, offering this Court on point analysis to support a final finding of willfulness against defendant Bank of America. See Alvarez v. IBP, Inc., 339 F.3d 894 (9th Cir. 2003); Chao v. A-

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One Medical Services, Inc., 346 F.3d 908 (9th Cir. 2003);11 Wertheim v. Arizona Department of Public Safety, 1993 US Dist. Lexis 21292 at *12-14 (D. Ariz.). In Alvarez, the Ninth Circuit affirmed the lower court's finding that willfulness attaches when the employer, having been placed on notice of possible FLSA overtime violations, nevertheless failed to comply with the FLSA.12 In Chao,

the Ninth Circuit affirmed the lower court's finding of willfulness when the employer evaded compliance with the FLSA overtime provisions by telling the employee to "think of all the blessings [she was] getting," after that employee complained about being denied overtime.13 In Chao, the Ninth Circuit (disagreeing with the lower court) found current violations of the overtime provisions of the FLSA willful based

See 29 CFR 578.3(c)(1). Under the Department of Labor's Field Operations Handbook for Wage-Hour Investigations, such facts and circumstances include, but are not limited to, admissions by the employer concerning knowledge of the FLSA, admissions of violations (such as acknowledgement of payment at straight time), whether information on the FLSA was given by the wage and hour investigators to the employer during prior or current investigations, and the employer's course of action after learning its practices are, or might be, in violation of the overtime provisions of the FLSA. See Field Operations Handbook, 81c05(a)(1), (6), and (7) attached as Exhibit B. 11 See Alvarez v. IBP, Inc., 339 F.3d 894, 908-09 (9th Cir. 2003) ("an employer need not knowingly have violated the FLSA; rather the three-year term can apply where an employer disregarded the very possibility it was violating the statute") Alvarez was affirmed by the US Supreme Court at 2005 U.S. LEXIS 8373, U.S., Nov. 8, 2005. Citations to prior procedural history on issues unrelated to this case are omitted. See also Chao v. A-One Medical Services, Inc., 346 F.3d 908, 918 (9th Cir. 2003) ("[a] violation of the FLSA is willful if the employer ... showed reckless disregard for the matter of whether its conduct was prohibited by the FLSA."). 12 Alvarez, 339 F.3d at 909. 13 Chao, 346 F.3d at 918.
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on the employer's prior FLSA overtime violations ­ even if those prior violations were different in kind (from the current violations) and even if those prior violations were not willful.14 Similarly, the Sixth Circuit found willfulness for current overtime violations when the DOL had previously determined overtime violations and the

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employer had previously agreed to future compliance with the FLSA.15 In Wertheim, Judge Broomfield held that the willfulness standard is met when the employer "disregards [DOL] warnings of likely non-compliance" or "disregards advice from an internal ... report."16 Similarly, willfulness exists when the employer should have known there was an "appreciable possibility" that its conduct violated the FLSA and "failed to take reasonable steps calculated to resolve doubt."17 Finally, and telling for purposes here, recklessness exists when the employer waits two years, after being on notice of possible FLSA overtime violations, to implement a corrective plan.18 III. The Defendant Bank Acted Willfully There is ample evidence demonstrating that the defendant Bank knew, or

Chao, 346 F.3d at 919 ("Unlike the district court, we find probative [the] former FLSA violations, even if they were different in kind from the instant one and not found to be willful. The fact that [the employer] previously had run-ins with the Labor Department certainly put [the employer] on notice of other potential FLSA requirements.... [The] prior FLSA violations, especially when combined with the undisputed testimony of the former employees, prove, at the very least, reckless[ness]...."). 15 See Dole v. Elliot Travel & Tours, Inc., 942 F.2d 962 (6th Cir. 1991). 16 See Wertheim, 1993 US Dist. Lexis 21292 at *12-14. 17 See, e.g., Laffey v. Northwest Airlines, Inc., 567 F.2d 429 (D.C. Cir. 1976). Although Laffey was decided prior to McLaughlin, it is instructive on the issue of "the possibility" of a violation. 18 See Huss v. City of Huntington Beach, 317 F. Supp. 1151, 1161 (C.D. Calif. 2000). See also Simpson v. Merchants & Planters Bank, 441 F.3d 572 (8th Cir. 2006) (when the defendant employer Bank's in-house lawyer was aware of the federal overtime requirements and was responsible for the Bank's personnel policies that violated those requirements, then a willfulness finding is appropriate thereby negating a good faith defense to double damages).

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alternatively and equally sufficient, recklessly disregarded a distinct and appreciable possibility, that it was violating the FLSA overtime provisions. A. Prior Department of Labor Findings of Overtime Violations Since 1942, the United States Department of Labor, Wage and Hour Division,

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("DOL") has been investigating and initiating litigation against the defendant Bank for overtime violations of the FLSA.19 Within the last ten years alone, the DOL has investigated the defendant Bank for FLSA violations in excess of 79 (seventy-nine) times.20 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.21 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

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Florida from August, 1998 ­ 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

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. 20 See Plaintiff's Expert's Preliminary Report, pp. 1, 13-14 attached hereto as Exhibit C. 21 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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the Bank agreed to pay "civil monetary penalty" in the amount of $3,700 for the Bank's prior violations of the FLSA. 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

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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. 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

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provisions.22 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 Bank's responses to discovery, however, the Bank did not honor its agreement with the DOL of "future compliance." 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

See Exhibit D.

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compliance agreements" with the DOL, defendants responded: "None."23 B. Private FLSA Client Manager Overtime Lawsuits 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,

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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.24 These California client manager private lawsuits were on behalf of over fifty-five percent (55%) of the client managers employed by the Bank nationwide.25 Subsequently in 2002, additional client manager overtime private litigation cases were filed as well.26 C. The 2000 Study by the Bank's Paid Consultant Lloyd Aubry The Court may recall that in connection with the 1999 client manager overtime litigation, the Bank's in-house attorney, Jay Price, retained the former head

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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

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. 24 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. 25 See Deposition of Patricia Roche-Fukushima ("Depo. Roche-Fukushima"), p. 71, lines 15-16, attached as Exhibit G. 26 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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traveled to Washington, interviewed client managers selected by the Bank,27 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

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the Bank of this conversation are the notes of now deceased attorney Barbara Davis, currently under review by this Court. 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

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status."28 Specifically, Mr. Aubry testified: I told the Bank ...that it might want to reexamine the exempt/nonexempt status of the position.29 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.

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 . 28 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 . 29 See Aubry Dec. ¶ 8 (Exhibit I).

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Q: So it was an open question? A: Correct."30 "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"31 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."32 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. 33 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

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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 investigations in Florida and in North Carolina concerning additional FLSA overtime violations that should have been explored further.

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4.

The Bank's Inaction Following the May 2000 Call

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

See Aubry Depo. p. 126, lines 4-9 (Exhibit H) 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). 32 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). 33 See Aubry Depo. p. 127 (lines 1-11) (Exhibit H).
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whether his recommendations or ideas were implemented, nor any information as to whether the Bank took affirmative steps as he had suggested they should.34 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

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violations raised by Mr. Aubry. 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. 35 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

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as exempt from overtime apparently until he settled the California client manager overtime litigation and implemented the reclassification in March 2002. 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

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). 35 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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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.

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Chester, litigation counsel for the Bank in this case.36 5. The Bank's Conduct Following March 2002

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.37 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

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premier banking met to discuss "client manager reluctance" to record all overtime hours.38 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

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. 37 See Plaintiff's Motion to Expand at pp. 7-9. 38 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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recording, overtime, and specified the number of those hours;39 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.40 To date, none of the client managers (including the non-opt-ins41) who were interviewed and told the Bank that they had worked off-the-clock hours have been compensated for those hours. 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. According to opt-in testimony, the market managers pressured client managers to work "off the clock" and not to report overtime hours because of budgetary

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constraints; in addition the market managers encouraged that overtime hours be worked in order to meet the sales goals set by the Bank.42

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. 40 See Id. 41 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. 42 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 -

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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."43 Another opt-in was told (by her market manager's assistant) not to record hours worked during lunch.44 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.45 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;" and b) "do not record all of the hours you work."46 To date, none of the off-the-clock hours, of which the Bank was made aware,

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ever led to a further inquiry, let alone payment of overtime compensation. 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. Instead, in July
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]. 43 See Massignani Declaration,¶ 15 (Exhibit R). 44 See Peterson Depo., p. 43 (lines 11-25); p. 44 (lines 1-22); and p.47 (line 8 and lines 15-16) (Exhibit T). 45 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]. 46 See Krebsbach Depo., p. 69, lines 14-16; p 72, lines 2-4, attached hereto as [Exhibit O].

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2005, the Bank reclassified client managers as exempt from overtime and never paid retroactive compensation for the off-the-clock hours worked from 2002 - 2005. III. There is Sufficient Evidence for a Final Finding of Willfulness The Court may properly enter a final finding of willfulness against the

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defendant Bank. The evidence here is similar to the exemplar evidence of willfulness under 29 CFR 578.3(c)(2) since 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. Relatedly, similar to the evidence in Donovan, the Bank clearly 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

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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. The evidence here is also similar to the exemplar evidence of willfulness under 29 CFR 578.3(c)(3) since having been placed on notice (by the multiple findings of overtime violations by the DOL (in particular those from the 1998-2002 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, the Bank should have inquired further and adequately into whether

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its conduct was in compliance with the Act -- yet it failed to make any inquiry, let alone a further adequate inquiry as set forth in the regulation.47 Moreover, here the Bank's conduct rises to the level of willfulness since it waited nearly two years, after being on notice of possible FLSA overtime violations,

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to implement a corrective plan, and when it did, it failed to pay retroactive overtime.48 More specifically, the Court may properly enter a final finding of willfulness against the Bank under standards set forth by the U.S. Supreme Court and the Ninth Circuit, since here the Bank, by ignoring the notice of possible violations specific to the very employee position at issue in this case given to it by its paid consultant Mr. Aubry, and by ignoring the express notice by client managers in 2003 and 2004 that off-the-clock hours were being worked but not compensated, "disregarded the possibility that it was violating the FLSA," and consequently "showed reckless disregard for the matter of whether its conduct was prohibited by

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the FLSA." See McLaughlin v. Richland, 486 U.S. 128, 133 (1988); Alvarez v. IBP, Inc, 339 F.3d at 908-09; Chao, 346 F.3d at 918. Stated another way, and in accordance with the willfulness standard in United States Court of Appeals for the District of Columbia, because the Bank should have known in May 2000 (from Mr. Aubry) and in fact did know in 2002-2005 (from the market manager's actions and from the client manager statements) that there was an

See CFR 578.3(c)(3). See Huss v. City of Huntington Beach, 317 F. Supp. 1151, 1161 (C.D. Calif. 2000).

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"appreciable possibility" that its conduct violated the FLSA" and that thereafter "failed to take reasonable steps calculated to resolve doubt."49 In addition, the Court may properly find willfulness here, as did the 9th Circuit in Chao and the 6th Circuit in Dole, based on the Department of Labor's numerous and repeated prior violations by the Bank of the overtime provisions of the FLSA and because the Bank had previously agreed to, but did not honor, its promise to the DOL of future compliance of the FLSA overtime provisions.50 Moreover, under Wertheim, the Court may properly find willfulness here because as stated above, the Bank "disregarded warnings of likely non-compliance" with the overtime provisions of the FLSA from a former head of the Department of Labor, its paid expert Lloyd Aubry.51 Finally, where, as here, the defendant employer Bank's in-house lawyer, Jay Price, was aware of the FLSA requirements (having defended prior client manager overtime litigation from 1999-2000 and having been presumably aware of the 2000

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49 50

California Huss case) and was responsible for the Bank's personnel policies that violated the FLSA, yet failed for nearly two years to act upon the notice of potential FLSA overtime violations -- both as to the misclassification from 2000 through 2002 and as to the off-the-clock work performed from 2002 through 2005, a willfulness finding is appropriate.52

See Laffey v. Northwest Airlines, Inc., 567 F.2d 429 (D.C. Cir. 1976). See Exhibit D; See footnote 23 supra. 51 See Wertheim v. Arizona Department of Public Safety, 1993 US Dist. Lexis 21292 at *12-14 (D. Ariz.). 52 See Huss v. City of Huntington Beach, 317 F. Supp. 1151, 1161 (C.D. Calif. 2000) (recklessness also exists when the employer waits two years, after being on notice of possible FLSA overtime

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IV.

Conclusion and Relief Requested There is sufficient evidence for a final finding of willfulness. That is because

the defendant Bank: (a) has been found liable, time and time again, and during the past ten years, (and in particular before and during the relevant time period here 19982002) for overtime FLSA violations (including failure to pay off the clock hours worked) by the Department Labor; (b) has failed to comply with its agreements with the Department of Labor of future FLSA overtime compliance; (c) has defended four overtime lawsuits (based on failure to properly classify client managers as non-exempt) from 1999-2002 for overtime compensation by client managers, and was thereby on notice of the overtime requirements, including in relation to the client manager position, and its possible violations of the same; (d) hired in 2000 the former head of the California Department of Labor, Mr. Aubry, as an expert consultant, who then told the Bank, also in 2000, that: (i) it was "possible" that the client managers were non-exempt; (ii) the client managers "appeared to be" non-exempt; (iii) that it was an "open question," whether the client managers were properly classified by the Bank exempt from overtime, and who then advised the Bank that it "might want to reexamine the exempt status" and "perhaps even make some changes ... to the exempt status." (e) ignored the possibility of such overtime violations for nearly two years, having failed to look into to resolve any doubt as to their compliance with the law; (f) then when 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; and (g) finally, even 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

violations, to implement a corrective plan); See also Simpson v. Merchants & Planters Bank, supra.

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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. Given the evidence presented, a finding of willfulness is appropriate, and the Bank has no credible defense against it.

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DATED this 13th 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 13th 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 19 electronic filing to the following CM/ECF registrants:
20

Charles L. Chester 21 Ryley Carlock & Applewhite One North Central Avenue, Suite 1200 22 Phoenix, AZ 85004-4417 Attorneys for Defendant Bank of America, N.A. 23
24 25 26

By: /s/ M. Stephenie Crowley

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