Free Reply to 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 REPLY IN SUPPORT OF HER MOTION TO EXPAND CONDITIONAL CERTIFICATION OF THE COLLECTIVE ACTION UNDER THE FEDERAL LABOR STANDARDS ACT

The Motion to Expand is Procedurally Proper
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Defendant would have this Court interpret its December 22, 2004 Order allowing plaintiff to "conditionally" proceed as a collective action as somehow a final ruling with prejudice that the Bank did not engage in willful behavior. That is simply not the case. The Court ruled that no adverse inference could be drawn from an apparently non-existent report from the defendant's expert/consultant and that the affidavit submitted by plaintiff depended upon inadmissible hearsay, and consequently there was insufficient evidence at that time of willfulness. [See Court Order dated December 22, 2004, p. 12].

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The Court did not deny with prejudice plaintiff's request for a finding of willfulness; it found that "[u]nlike the plaintiff in Wertheim, plaintiff has not established that evidence exists of Defendant's willful conduct regarding the

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requirements of the FLSA. [Id.]1 In Wertheim, the court initially denied plaintiff's motion to proceed and it was not until at least a year later that the plaintiff approached the Court a second time with additional evidence, which the Court considered without incident and upon

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which the court made a finding of willfulness.2 Similarly here plaintiff comes to the Court with qualitatively different evidence that she did not know, and simply could not have known, at the time of her initial motion and thereafter.3 In any event, since the defendant continues to withhold key documents (e.g.,

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non-privileged notes from a 2000 meeting, per pay period records from 2000 forward, and nearly all of the small business client manager personnel files) and has refused to produce for a deposition a key witness (former Bank employee John Morton) bearing on the issue of willfulness, it can hardly argue that plaintiff's motion
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In addition, the Court did not "affirm" anything in its June 2005 Order, as suggested by defendant. The "Background" section and in one other place the Order references the history of the Court's December 22, 2004 Order. Defendant's exaggeration of the reference should be disregarded. 2 Compare Wertheim, 1992 WL 56632 (D. Ariz.) with Wertheim 1993 US Dist. Lexis 21292 (D. Ariz.). 3 Throughout its Response, the defendant suggests that the evidence argued by Plaintiff has been in her possession since June, and the majority of it since December 2004, and further that a nationwide conditional certification could have been sought in December 2003. This suggestion is untrue. Furthermore, it completely ignores the fact that at defendant's urging this case was stayed for over ten months in 2004, that discovery did not even commence until February 2005, and that defendant has been withholding key evidence on the issue of willfulness ever since. See p.3 and footnote 3 infra.

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should be denied on procedural grounds.4 Even if the Court were to examine the specific procedural argument raised by defendant, such arguments are unsupported by the facts and the law, and in any event

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should be rejected based on the defendant's stonewalling in this litigation. Specifically defendant argues that plaintiff's motion is a procedural motion, akin to a motion to amend the complaint or a motion to join additional parties.

The Bank refuses to produce any portions of the notes taken in 2000 by an attorney at the meeting in which the Bank's paid expert and overtime law consultant told the Bank that it: (i) "might want to reexamine the exempt/non-exempt status of the [client manager] position;" and (ii) "might want to ... perhaps even make some changes to ... its exempt status;" [See Declaration of Lloyd W. Aubry, Jr. dated October 21, 2005, ¶¶ 8 and 15 attached to Defendant's Response.] Any factual statements, the expert's opinion or advice, or any other non-attorney work product information contained therein is clearly discoverable and directly related to what written information was provided to the Bank in 2000 on the issue exempt status of client managers. The Bank failed to produce the 2000, 2001, and 2002 per pay period records of each opt-in, which incidentally are the source of when a cause of action for overtime compensation accrues. More importantly, though, these documents, along with the employment agreements and the employee handbooks demonstrate that the client managers were not paid a guaranteed salary, and therefore could not be exempt from overtime. Just a few days ago, and after plaintiff filed this instant motion, the Bank finally provided plaintiff with some per pay period records, including from November 1, 2001 through March 2002. Indeed these show that the client managers had to purchase time off, and therefore were not paid a guaranteed salary. The information contained in the per pay period records, in conjunction with the employee handbooks, is a significant factor on the issue of willfulness because had the Bank acted on its expert/consultant's advice in 2000 and reexamined the exempt status of the client managers, it would have readily and immediately learned upon even a preliminary review of its pay practices to the client managers that the client manager position was not exempt based on the simple fact the Bank was not paying a guarantee salary to the client managers ­ a condition precedent to classifying the client managers as exempt from overtime. The Bank also failed to produce all of the personnel files of each opt-in. Specifically, the defendant has provided very few of these files for the small business client managers. Finally, the Bank refuses to produce for a deposition former bank executive, John Morton, who oversaw and managed the instructions to Bank managers regarding the implementation of the client manager reclassification in 2002 from exempt to non-exempt status. In addition, Mr. Morton was apparently responsible for the sales performance for all of the premier client managers, which is directly relevant to the bank's defense in this case that the client manager's primary job duties were not sales. Clearly Mr. Morton has personal knowledge likely to lead to the discovery of relevant evidence and personal knowledge that is relevant evidence, yet the Bank will not produce Mr. Morton for a deposition. All of these discovery disputes are the subject of the upcoming November 9, 2005 Discovery Dispute Conference with Court.

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Defendant also argues that plaintiff's motion is really a motion for reconsideration. Plaintiff's motion does not seek to amend the complaint; her Complaint already includes allegations of willfulness and the application of a three-year statute

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of limitations. Plaintiff's motion does not seek to join any additional parties; it is, in part, on behalf of the existing opt-ins who have been part of this litigation since February 2005 and any future opt-ins who should they be given the opportunity to learn of this litigation may decide to opt-in. Neither existing or potential opt-ins are

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"parties" unless they are allowed to join Ms. Hutton as a class representative. In any event, whether the existing opt-ins may pursue their claims for overtime compensation based on the evidence now available to the Court regarding defendant's willful conduct has nothing to do with amending the complaint or adding parties.

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Further, plaintiff's motion cannot be characterized as a motion for reconsideration since neither the existing opt-ins (nor any future opt-ins for that matter) were part of this lawsuit when plaintiff filed her motion to proceed. In fact, since the time that the opt-ins became part of this litigation in February 2005, Defendant has refused to engage in any discovery unless it relates to an existing optin, and further insists that such existing opt-ins cannot act through their class representative, but rather should be treated as "individuals," including being subjected to individualized discovery.5

This issue is also scheduled to be part of the upcoming Discovery Dispute Conference with the

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Defendant cannot have it both ways. Defendant cannot on the one hand limit discovery and ignore the representative status of Ms. Hutton by demanding that employees participate in this litigation as individuals, and yet somehow claim that

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those same individuals are estopped from asserting their claim regarding the Bank's willfulness because of the class representative's initial motion to proceed, which predates the opt-ins by over two years and pre-dates any future opt-ins (who as of this moment are not even aware of the litigation) by at least three years.

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Finally, given that the parties have agreed to extend the discovery deadline in this action6, defendant's argument that it would somehow be prejudiced by the expansion of the conditional collective is disengenuous.

Plaintiff's Evidence of Willfulness is Sufficient to Warrant an Expansion of this Conditional Collective Action Nationwide and an Extension of the Notice Period 14 from Two to Three Years
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Prior to the time that the conditional collective is finalized, it is within the Court's discretion to conditionally expand the collective as to time and number ­ especially where, as here, plaintiff presents sufficient evidence that the defendant employer engaged in willful conduct. Here, the Bank does not dispute that the Department of Labor, Wage and Hour Division, initiated 79 (seventy-nine) FLSA overtime compliance actions against it. The Bank's only argument here is that this fact alone is insufficient.

Court. 6 See p. 7 infra.

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An examination of just a few of these investigations, however, reveals that the Department of Labor found multiple violations from 1993 through 2004 of FLSA overtime provisions, obtained over $150,000.00 in retroactive back wages in

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overtime pay for over 300 employees, and imposed in almost every instance of overtime violations civil monetary penalties. [See Ex. A attached hereto.] Importantly, each time the Department of Labor found violations against the Bank for violations of the overtime law, the Bank promised to comply with the law in the

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future. Sadly, it did not. In addition, the Department of Labor made findings significantly similar to those alleged here. These include: employees being told not to record more than 40 hours of overtime; employees not being paid for work performed during lunch; employees being pressured to work off the clock; and employee not experiencing any

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change in the position after the conversion from exempt to non-exempt status. [See Id.] In addition, the Bank does not dispute that client managers have been claiming a denial of overtime pay since 1999. Relatedly, the Bank neglects to mention that in the three client manager lawsuits from 1999 and 2002, the Bank settled those claims by paying retroactive overtime.7

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The Bank's argument that the private lawsuits are irrelevant to the new opt-ins since they could only raise an off the clock claim missed the mark. The parties would use the Notice of Opt-In previously approved by this Court and plaintiff could certainly mail the Notices within one week of the Court's ruling, provided of course that the Bank provides the names and addresses in a timely manner.

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Further, the Bank does not deny that it was on notice of the possibility that the client manager position might not be an exempt position. Indeed, their own former expert/consultant submitted a declaration stating that he told the Bank that they might

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want to re-examine the exempt/non-exempt status of the position and perhaps even make some changes to the exempt status. [See Ex. 10, ¶¶ 8, 15 to Defendant's Response.] Further, the Bank does not deny that it has been on notice of client manager

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complaints that the Bank's market managers pressured the Arizona and Texas client managers to work off the clock due to budgetary constraints. In addition, the Bank does not deny that client managers nationwide were subject to the same sales goals and sales-related bonus and incentive pay. Given this, in combination with the Bank's ranking of client managers nationwide by their sales performances, it is

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reasonable to infer for purposes of allowing conditional certification that there is a nexus between the sales goals, the overtime budget, and perhaps implicit pressure to work off the clock. In any event, the evidence of willfulness presented here is sufficient to extend the statute of limitations from two to three years for the existing opt-ins and to allow notice of this action to client managers in Arizona who worked for the Bank on or after October 31, 2000.

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The Client Manager Positions are Similarly Situated Defendant argues that the more stringent similarly situated standard of proof should be applied because discovery has already concluded. [Response, p. 5]. Yet

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defendant neglects to inform the Court of its pending motion for extensions of all deadlines, including discovery deadlines, and plaintiff's partial consent to the same. In any event, since defendant refuses to respond to discovery requests relating to any client manager except the existing opt-ins or relating to any geographic area

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(except Arizona), it can hardly argue that plaintiff has been afforded any opportunity to conduct discovery on the issue of whether Ms. Hutton is similarly situation to the client managers nationwide. Consequently, this Court may apply the two-step

approach involving initial notice to prospective opt-ins followed by a final evaluation of whether such opt-ins are similarly situated.

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Under the two-tiered inquiry, the Court: (1) allows the plaintiff to proceed on a conditional basis upon plaintiff's minimal evidentiary showing that she can meet the substantive requirements of 29 U.S.C. §216(b) (i.e., that the plaintiffs are similarly-situated); and (2) renders a final decision regarding proceeding as a collective action with the benefit of all the evidence gathered in discovery including additional plaintiffs. The first determination is based on the pleadings and any affidavits that have been submitted as to whether the class should be certified.

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Because of the minimal evidence at this stage, this determination is made based on a fairly lenient standard.8 Here, the plaintiff's evidence of willfulness before this Court demonstrates

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that plaintiff has met the minimal evidentiary threshold that she can meet the substantive requirements of 29 U.S.C. §216(b) (i.e., that the plaintiffs are similarlysituated). Specifically, the client managers are the victims the Bank's failure in 2000 to

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inquire further about the exempt status. Client managers are the victims of the Bank's failure to follow the advice of its paid expert/consultant to re-examine or make some changes to the exempt status of the client manager position. Client managers are the victims of the Bank's ignoring the possibility that the client managers were being denied overtime compensation. Finally, the client managers

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are the victims of the Bank's alleged business decision to not pay retroactive overtime, unless the Department of Labor ordered it to or unless the client manager filed or participated as an opt-in in a private lawsuit. The minimal evidentiary threshold regarding "similarly situatedness" has been met and this Court may allow plaintiff to issue notice of the conditional collective action to all client managers who worked on or after October 31, 2000 for Bank of America.

See Court Order Dated December 22, 2004, pp. 3-4.

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Conclusion & Relief Requested Plaintiff respectfully requests that this Court extend the two-year time period as applied to the existing opt-ins to three years. In addition, plaintiff respectfully

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requests that this Court extend the conditional certification to allow notice of the conditional collective action to all client managers who worked for the Bank on or after October 31, 2000. DATED this 3rd day of November, 2005. 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 I hereby certify that on this 3rd day of November, 2005, I electronically transmitted to the clerk's office using the CM/ECF system for filing and transmittal of a notice of electronic filing to the following CM/ECF registrants: Charles L. Chester John M. Fry Ryley Carlock & Applewhite One North Central Avenue, Suite 1200 Phoenix, AZ 85004-4417 Attorneys for Defendant Bank of America, N.A.

And a courtesy copy hand-delivered to: Honorable Roslyn O. Silver 23 United States District Court Sandra Day O'Connor U.S. Courthouse, Suite 624 24 401 West Washington Street, SPC 59 25 Phoenix, AZ 85003-2158
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By /s/ Lydia A. Jones
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