Free Motion to Certify Class - 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. Introduction Plaintiff on behalf of herself and the collective moves this Court to expand the conditional certification of the collective to allow notice of this collective action to be sent to Bank of America Premier and Small Business Client Managers who worked for the defendant Bank in Arizona and all other states from October 2000 through the present and consequently to allow the current opt-ins to pursue claims from October 2000 as well. On December 12, 2003, Plaintiff filed a Motion to Proceed as a collective action under 29 U.S.C. §216(b) of the Federal Labor Standards Act. Although oral argument was held in February 2004, the parties stipulated to stay the action pending mediation before the Court could rule on Plaintiff's Motion. The Court then ruled on Plaintiff's Motion by Order dated December 22, 2004.
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No. CV2003-2262-PHX-ROS Plaintiff's Motion To Expand Conditional Certification Of The Collective Action Under The Federal Labor Standards Act

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In the Court's December 22, 2004 Order, the Court conditionally certified this action to proceed as a collective action under the FLSA and allowed plaintiff to issue notice of the collective action to Bank of America Premier and Small Business Client Managers who worked in Arizona from October 2001 to the present. In other words, the Court allowed a two-year statute of limitations to govern the notice period. In her Motion to Proceed dated December 12, 2003, plaintiff sought a threeyear statute of limitations notice period based on the allegation that the Bank willfully violated the overtime provisions of the FLSA. At the time of her Motion (December 12, 2003), however, the case was in a very early stage and the factual record on the issue of willfulness had not been developed. Accordingly, the Court found that plaintiff had insufficient evidence at that time to establish a willful violation of the FLSA by the defendant and consequently notice of the conditional collective action was sent to employees within the two-year statute of limitations only. Plaintiff now has sufficient evidence to establish a willful violation of the FLSA by the defendant to warrant the extension of the statute of limitations notice of the conditional collective period from two to three years, and consequently to allow the current opt-ins to pursue claims for the additional year as well. In addition, because the Bank willfully violated the FLSA overtime provisions with respect to all of the Premier and Small Business Client Manager positions nationwide (including by implementing a nationwide plan to pay some overtime, yet also encouraging and approving off the clock work), Plaintiff also requests that this Court expand the conditional certification and allow notice of the conditional collective action be sent to all Premier and Small Business Client Managers who worked for Bank of America in the United States since October 2000.

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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. 29 U.S.C. §255(a). Willfulness exists if the employer "knew" that its conduct violated the FLSA or "recklessly disregarded" that fact. 29 CFR 578.3(c)(1); McLaughlin v. Richland, 486 U.S. 128, 133 (1988). An employer is deemed to have "knowledge" where "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." 29 CFR 578(c)(2). An employer's conduct is deemed to be "reckless" where "the employer should have inquired further into whether its conduct was in compliance with the Act and failed to make adequate further inquiry." 20 CFR 578(c)(3). In order to make a determination of willfulness, all of the facts and circumstances surrounding the alleged violations should be considered. 29 CFR 578.3(c)(1). Under Ninth Circuit caselaw, the willfulness standard is met where the employer disregarded the possibility that it was violating the FLSA. 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"); Chao v. A-One Medical Services, Inc., 346 F.3d 908 (9th Cir. 2003). In Alvarez, the Ninth Circuit affirmed the lower court's finding of willfulness where the employer, having been placed on notice of possible FLSA overtime violations, evaded compliance with the FLSA. Alvarez, 339 F3d at 909. In Chao, the Ninth Circuit affirmed the lower court's finding of willfulness where the employer evaded compliance with the overtime provisions of the FLSA by telling the employee to "think of all the blessings [she was] getting" when that
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employee had complained about being denied overtime. Chao, 346 F.3d at 918. Also in Chao, the Ninth Circuit (disagreeing with the lower court) also found willfulness based on the employer's prior FLSA violations ­ even where those violations were not willful. 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]...."). Under the United States District Court for the District Court of Arizona caselaw, the willfulness standard for the purpose of authorizing notice of a collective action is met where the employer disregards warnings of likely non-compliance with the overtime provisions of the FLSA from the Department of Labor or disregards advice from an internal committee report. See Wertheim v. Arizona Department of Public Safety, 1993 US Dist. Lexis 21292 at *12-14 (D. Ariz.). Other jurisdictions have found willfulness where: (a) the employer waited two years, after being on notice of possible FLSA overtime violations, to implement a corrective plan, and when it did finally implement the plan, it failed to implement it retroactively, Huss v. City of Huntington Beach, 317 F. Supp. 1151, 1161 (C.D. Calif. 2000); (b) the employer encouraged employees to alter time cards to spread the hours out, Tracy v. Mortgage One, Inc., 1999 US Dist Lexis 20914 (D. Oregon); and (c) the employer had destroyed some records and withheld others in order to impede a Department of Labor overtime investigation, Martin v. Deiriggi, 985 F.2d 129, 135136 (4th Cir.1992).

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The Defendant Acted Willfully Plaintiff submits that the following evidence demonstrates that the defendant Bank had knowledge that it was violating the FLSA overtime provisions with respect to the client manager positions on a nationwide basis, that it recklessly disregarded the possibility that it was violating the FLSA overtime provisions with respect to the client manager position nationwide, and when it finally (after having been on notice for several years of its FLSA violations) implemented a nationwide plan to pay some overtime to client managers, it knowingly, or at a minimum recklessly, engaged in a sham compliance of the FLSA by encouraging and approving off the clock work due. Finally, although a finding of either knowledge or recklessness is sufficient to establish willfulness, plaintiff submits that its evidence developed thus far shows that both elements (meaning knowledge and recklessness) are met here in any event. There is sufficient evidence of willfulness to extend the notice period for the conditional collective action from two years to three years and to send notice of the conditional collective to client managers who worked in Premier or Small Business in the United States beginning on or after October 2000. That evidence is: 1. Within the last ten years, the United States Department of Labor, Wage and Hour Division, initiated 79 FLSA overtime compliance actions against the Bank.1 The Bank was consequently clearly aware of its legal obligations regarding the payment of overtime to client managers during the relevant time period of 2000 forward. 2. Beginning in 1999, client managers working for the Bank sought substantial unpaid overtime wages through private lawsuits.2 Because the client

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See Plaintiff's Expert's Preliminary Report, page 13 attached hereto as Exhibit A. See, e.g., The 1999 client manager overtime cases of Goss et al v. Bank of America, NA, et al, Superior Court for the State of California, County of Los Angeles, Case BC 223312 and Koye et al v. Bank of America Corp.,

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manager positions are substantially the same job in each state,3 this put the Bank on notice of possible overtime violations with respect to the client manager position nationwide, yet as demonstrated below, the Bank ignored for several years, its duty to confirm compliance with the law. 3. In 2000, the Bank was informed by the former head of the

Department of Labor for the State of California, who was a paid expert serving the Bank, that the client manager positions were not exempt from overtime compensation. The Bank has admitted, however, that it did not act on this

information until over two years later.4 In other words, the Bank has admitted that it had actual knowledge that the client manager positions were not exempt from overtime compensation - yet it waited over two years in each and every state to do something about it. 4. In mid-2002, well over four or five years after the Bank should have known (and clearly over two years after the Bank did know) that the client manager

Superior Court for the State of California, County of Santa Barbara, Case BC 1002212 and the 2002 case of Luciano et al v. Bank of America, NA, Superior Court for King County, State of Washington, Case 02-207254. 3 Specifically, the client manager job description of selling bank identified products to bank identified customers was essentially the same in each state, all client managers were given sales training together and nationally at the Bank's Client Manager University, all client managers were given the same form of evaluation and performance appraisals, all client managers were paid under the same incentive plan, all client manager positions were governed by the same Associate Handbook, and all client managers were required to sign the same or substantially the same form of employment and confidentiality agreements. See Declaration of Kaye Hutton dated October 5, 2005 attached hereto as Exhibit 1; Bank of America Client Manager Job Descriptions attached as Ex. 1-A to Ms. Hutton's Declaration [Ex. 1]; Samples of Bank of America Rankings of Client Managers in various states attached as Ex. 1- B to Ms. Hutton's Declaration [Ex. 1]; Annual Client Manager Incentive Plans attached as Ex 1-C to Ms. Hutton's Declaration [Ex. 1]; Bank of America Associate Handbooks for 2000, 2002, and 2005 attached as Ex. 1-D, Ex.1-E, and Ex. 1-F respectively to Ms. Hutton's Declaration [Ex, 1]; Bank of America Forms, including sample national training materials attached hereto as Ex. 2, form of evaluation and performance appraisals attached hereto as Ex. 3, form of employment and confidentiality agreements attached hereto as Ex. 4. 4 See Transcript from Oral Argument, p. 29 (lines 12-20), p. 40 (lines 13-25), p. 41 (lines 1-4) [Exhibit B]; 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). [Exhibit C].

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positions were not exempt from overtime, the Bank implemented an illusory FLSA compliance program nationwide­ that of telling all the client managers on a nationwide basis that nothing has changed in the client manager position, except that client managers must submit time sheets.5 5. In addition, in implementing its alleged FLSA compliance program in 2002 for all client managers in the United States, the Bank refused to pay any retroactive overtime compensation to any of the client managers who worked for the Bank in the United States and who had been entitled to overtime pay since at least 2000. In addition, there is no evidence that the Bank communicated to the client managers all of the different kinds of work hours and activities that are to be included and recorded as overtime, or that the Bank ever informed client managers as to how the overtime wages are to be calculated. 6. In addition, in implementing its alleged FLSA compliance program, client managers were instructed to record a very limited amount of hours (usually no more than 40-44 hours of time worked), regardless of the number of hours worked. For example, client managers in Texas were told not to record and submit for compensation all overtime worked, but instead to consider it a "personal investment" in their professional careers. Also by way of example, client managers in Arizona were told that even if they worked through lunch, they could not record those lunch hours on their timesheets.6
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This is evident by the Bank's FLSA Q&A. See [Exhibit D]. See Plaintiff's Objections and Responses to Defendant's First Set of Interrogatories and First Request for the Production of Documents [Exhibit E]; Opt-In Declarations of Larkin [Exhibit F], Lyftogt [Exhibit G], Hutton dated Dec. 12, 2003 [Exhibit H], Hutton dated Jan. 19, 2004 [Exhibit I], Peterson dated Jan. 16, 2004 [Exhibit J], Peterson dated Sept. 16, 2005 [Exhibit K], McClintic [Exhibit L]; and Cooper [Exhibit M]; Opt-in Declaration of Massignani, ¶¶ 14-17 [Exhibit N]; Deposition Testimony of Kaye Hutton ("Hutton Depo.") p. 159 (lines 1-17); Deposition Testimony of Jan Peterson ("Peterson Depo.") p. 43 (lines 11-25); p. 44 (lines 122); and p.47 (line 8 and lines 15-16); McClintic Depo. p. 29 (lines 10-24), p. 32 (lines 9-10). [All of the pages cited to the Hutton Depo. herein are attached as Exhibit O, all of the pages cited to in the Peterson Depo. are attached as Exhibit P and all of the pages cited to in the McClintic Depo. are attached as Exhibit Q.]

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7. In addition, Bank market managers pressured client managers to work "off the clock" and not to report overtime hours because of budgetary constraints, yet they were aware, and in fact encouraged, that overtime hours be worked in order to meet the sales goals set by the Bank.7 8. Specifically, market managers pressured the client managers directly in the form of telling the client managers not to record any hours worked in excess of 40, and indirectly in the form of private and group (meaning in front of the entire client manager team) reprimands of client managers for recording overtime hours worked in excess of 43 or 44 and for recording overtime hours when sales goals were not being met. These client managers were also told that because there was a limited amount of overtime compensation in the budget ­ the hours recorded and submitted had to be spread among the "team" of client managers regardless of how many hours were actually worked, or the client managers were suppose to take "comp time" off in lieu of showing the overtime hours actually worked. Finally, client managers were consistently told by their market managers that they had to work the overtime hours to meet the Bank's sales goals, but that they should under-report their hours on their time sheets because there was insufficient money in the market manager budgets to pay overtime compensation for the hours worked. 8

See Plaintiff's Objections and Responses to Defendant's First Set of Interrogatories and First Request for the Production of Documents [Exhibit E]; Opt-In Declarations [Exhibits F through M]; Massignani Dec., ¶¶ 1318[Exhibit N]; 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 O]; 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 125), p. 95 (lines 1-10) [Exhibit P]; McClintic Depo. p. 66 (lines 14-21) [Exhibit Q]. 8 See Plaintiff's Objections and Responses to Defendant's First Set of Interrogatories and First Request for the Production of Documents [Exhibit E]; Opt-In Declarations [Exhibits F through M]; Massignani Dec. ¶¶ 15 and 16 [Exhibit N]; Hutton Depo. p. 156 (lines 1-25), 159 (lines 1-17), p. 168 (lines 16-25), p. 169 (lines 1-17, 2225), p. 170 (lines 1-19) [Exhibit O]; 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 P]; McClintic Depo. p. 34 (lines 10-25), p. 35 (lines 1-24), p. 56 (lines 14-17), p. 66 (lines 14-25), p. 67 (lines 1-11), p. 75 (lines 8-25, p. 76 (lines 6-25), p. 77 (lines 1-14) [Exhibit Q].

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9. Upper management was aware in 2002 that "off the clock work" was being performed by all client managers throughout the United States, yet the Bank has no documentation to demonstrate that the Bank bothered to address this issue with the client managers, and even in mid- 2005 executive upper management continued to pressure all premier client managers in every state to work "off the clock" because of budgetary constraints.9 10. Client Managers nationwide from 2002 through 2005 filled out and submitted the same form time sheets under the same working conditions described above and in accordance with instructions to under-report overtime hours. This practice was approved and signed off by the market managers, as indicated by their signatures appearing thereon.10 Plaintiff's Have Sufficient Evidence of Willfulness for Conditional Certification of a Nationwide Collective Action Under the Three-Year Statute of Limitations Given the above evidence, it is clear that the defendant Bank: (a) had knowledge since at least 2000 that it was violating the FLSA overtime provisions with respect to the client manager positions nationwide; (b) had recklessly disregarded since the mid-1990s the possibility that it was violating the FLSA

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See Bank of America Premier Client Manager Reclassification [Exhibit R]; Massignani Dec, ¶ 17 [Exhibit N]; Hutton Depo. p. 194 (lines 3-25), p. 195 (lines 1-25), p. 196 (lines 1-13) [Exhibit O]; McClintic Depo. p. 34 (lines 10-25), p. 35 (lines 1-24) [Exhibit Q]. 10 See e.g., Hutton Depo., p. 187 (lines 24-25), p. 188 (lines 1-21) [Exhibit O]; Peterson Depo., p. 50 (lines 1525), p. 51 (lines 1-13) [Exhibit P]; McClintic Depo. p. 28 (lines 15-25), p. 29 (lines 1-4) [Exhibit Q].
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overtime provisions with respect to the client manager position nationwide; (c) when it finally (after having been on notice for several years of its FLSA violations) implemented a plan nationwide to pay some overtime to client managers, it

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implemented the plan inconsistently and encouraged substantial amounts of "off the clock" work, thereby in reality engaging in sham compliance of the FLSA. Here, similar to Wertheim, the Bank had knowledge since at least 2000 that it was violating the FLSA because it received such advice from its paid expert

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consultant, who was also a former Department of Labor official. In addition, similar to Alvarez and Huss the Bank evaded compliance for more than two years after it had such knowledge, thereby disregarding the possibility that it was violating the FLSA. Significantly, the facts here warrant a finding of willfulness because the Bank waited over two years to implement a corrective plan after being on notice of possible violations of the FLSA and when it did implement a plan, it failed to implement the plan retroactively. See Huss, 317 F. Supp. at 1161. Even more egregious than the employer's conduct in Huss, though, here after the Bank implemented its partial compliance program, it simultaneously encouraged and approved off the clock work thereby continuing to evade compliance from 2002 through 2005. By way of example, the Bank instituted inconsistent authorization of overtime pay by allowing liberal overtime hours where sales goals were met, but restricting overtime hours where sales goals were not met. Also by way of example, client managers were instructed to record a very limited amount of hours (usually no more than 40-44 hours of time worked), regardless of the number of hours worked. Specifically, similar to the employees in Chao who were told to "consider their blessings," client managers in Texas were told not to record and submit for compensation all overtime worked, but instead to consider it a "personal investment" in their professional careers and client managers
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in Arizona were told that even if they worked through lunch, they could not record those lunch hours on their timesheets. Moreover, similar to Tracy, the Bank improperly encouraged client managers to submit inaccurate time cards and to spread the hours out among the client managers on their team, and also to take comp time in lieu of overtime hours. And finally, similar to Martin, the Bank has destroyed or withheld in connection with the discovery process herein per pay period records key to their own defense that the salary test has been met. See Plaintiff's Response to Defendant's Objection and Motion to Extend Scheduling Order Deadlines. Conclusion and Relief Requested The Motion should be granted and notice of the conditional collective action should be sent to all Premier and Small Business Client Managers who worked for the Bank in the United States beginning on or after October 2000. DATED this 7th day of October, 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

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I hereby certify that on this 7th day of October, 2005, I electronically transmitted to the clerk's office using the CM/ECF system for filing and transmittal of a notice of 2 electronic filing to the following CM/ECF registrants:
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Charles L. Chester 4 Ryley Carlock & Applewhite One North Central Avenue, Suite 1200 5 Phoenix, AZ 85004-4417 Attorneys for Defendant Bank of America, N.A.
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And a courtesy copy hand-delivered to:

Honorable Roslyn O. Silver United States District Court 9 Sandra Day O'Connor U.S. Courthouse, Suite 624 10 401 West Washington Street, SPC 59 Phoenix, AZ 85003-2158
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By /s/ Lydia A. Jones

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