Biggs v. Quicken Loans, Inc.

990 F.Supp.2d 780

Erik W. BIGGS, individually and on behalf of all other similarly situated employees, Plaintiffs,

v.QUICKEN LOANS, INC., David Carroll, and Daniel Gilbert, Defendants.

Case No. 10–cv–11928.

United States District Court,

E.D. Michigan,

Southern Division.

Feb. 19, 2014.

Adam W. Hansen, Robert L. Schug, Nichols Kaster, LLP, San Francisco, CA, Curtis P. Zaun, Paul J. Lukas, Rachhana T. Srey, Nichols Kaster, PLLP, James H. Kaster, Nichols Kaster, Attorney At Law Minneapolis, MN, for Plaintiffs.

Jeffrey B. Morganroth, Mayer Morganroth, Morganroth & Morganroth, Birmingham, MI, Robert J. Muchnick, William D. Sargent, Honigman, Miller, Detroit, MI, for Defendants.

ORDER DENYING MOTION FOR SUMMARY JUDGMENT ( document no. 141 )

STEPHEN J. MURPHY, III, District Judge.

This is the fourth of four separate actions under the Fair Labor Standards Act (“FLSA”) challenging Defendant Quicken Loans' failure to pay allegedly required overtime benefits to Plaintiffs Erik Biggs and several dozen other current and former employees. Defendants now move for summary judgment, arguing that the recent vacation of agency opinion AI 2010–1, warrants granting them summary judgment under Section 10 of the Portal–to–Portal Act for any claims arising after the issuance of AI 2010–1. The Court, having reviewed the papers, concludes that a hearing is not necessary to resolve the motion. See E.D. Mich. LR 7.1(f)(2). For the reasons stated below, the Court will deny the motion without prejudice.

STANDARD OF REVIEW

Summary judgment is warranted “if the movant shows there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A dispute over material facts is “genuine” “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). To show that a fact is, or is not, genuinely disputed, both parties are required to either “cite[ ] to particular parts of materials in the record” or “show[ ] that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1). In considering a motion for summary judgment, the Court must view the facts and draw all reasonable inferences in a light most favorable to the nonmoving party. 60 Ivy St. Corp. v. Alexander, 822 F.2d 1432, 1435 (6th Cir.1987). The Court must take care, in evaluating the motion, not to make judgments on the quality of the evidence, because the purpose of summary judgment is to determine whether a triable claim exists. Doe v. Metro. Nashville Public Schools, 133 F.3d 384, 387 (6th Cir.1998) (“[W]eigh[ing] the evidence ... is never appropriate at the summary judgment stage.”).

BACKGROUND

Plaintiffs are current and former mortgage bankers that work for Quicken Loans, who assert that Quicken Loans owes them back overtime payments for hours worked in excess of forty per week as required by the FLSA. Quicken Loans' business model includes two types of mortgage bankers: “web loan consultants,” who work out of Quicken Loans' centralized web call center, and “branch loan consultants,” who work out of Rock Financial's traditional branch offices. Defendants assert Plaintiffs were not entitled to overtime compensation because they fell under the “administrative exemption” to the FLSA because of the nature of their jobs as mortgage bankers. The first case, Henry v. Quicken Loans, No. 04–40346, on behalf of a set of web loan consultants, proceeded to trial in March of 2011, resulting in a jury verdict for Quicken Loans which was affirmed on appeal. See Henry v. Quicken Loans, 698 F.3d 897 (6th Cir.2012).

Here, Plaintiffs are web loan consultants working for Quicken Loans, who argue they were denied overtime pay as required by the FLSA for a period between the U.S. Department of Labor's promulgation of an Administrator's Interpretation opining that mortgage bankers were not administratively exempt and were due overtime, and the period Quicken Loans reclassified their loan consultants and began paying them overtime—a time period between March 24, 2010 and May 31, 2010.

I. Legal Standards, FLSA 2006–31 and AI 2010–1, and Procedural History

The FLSA requires employers to pay employees who work more than forty hours per workweek overtime wages. Several categories of employees are exempt from this rule, including those “employed in a bona fide executive, administrative, or professional capacity ... or in the capacity of an outside salesman [.]” 29 U.S.C. § 213(a)(1). The U.S. Department of Labor subsequently promulgated regulations outlining the scope of the “administrative” exemption. See generally29 C.F.R. §§ 541.200 et seq.;29 C.F.R. § 541.2(a)(1), (e)(2) (2004). A significant part of the proceedings in Henry addressed the proper interpretation of this statute and regulation with respect to the mortgage loan officer plaintiffs.

Although Henry ultimately turned on a jury's determination of facts, the Court also examined the history of the Department of Labor's own interpretation of the statute and regulations. Briefly, prior to 2006, there was no single authoritative interpretation of the administrative exemption with respect to mortgage bankers. The Department of Labor had issued two unsigned opinion letters, and district court cases split on the question. Compare Reich v. John Alden Life Ins. Co., 126 F.3d 1 (1st Cir.1997), with Casas v. Conseco Finance Corp., No. Civ. 00–1512, 2002 WL 507059 (D.Minn. Mar. 31, 2002). The Department of Labor then concluded that mortgage loan officers were administratively exempt in an signed, authoritative opinion letter issued by the Wage and Hour Division (“WHD”) on September 8, 2006. Wage & Hour Div. U.S. Dept. of Labor, Opinion Letter FLSA 2006–31, Sept. 8, 2006 (“FLSA 2006–31”). Subsequently, in 2010, the Department issued an “Administrator's Interpretation” of the same regulations, in which it concluded that mortgage bankers did not fall within the administrative exemption and were eligible for overtime. Wage & Hour Div., U.S. Dept. of Labor, Administrator's Interpretation 2010–1 (Mar. 24, 2010) (“AI 2010–1”). AI 2010–1 also withdrew FLSA 2006–31.

In Henry and the instant cases, the Court concluded that after the issuance of FLSA 2006–31, Quicken Loans' reliance on the letter in classifying Plaintiffs as administratively exempt from overtime constituted the basis for good faith reliance for the purposes of Section 10 of the Portal–to–Portal Act, which served as a full defense to the FLSA overtime action for the period after the letter's issuance on September 8, 2006. Henry, Order Overruling Objections, ECF No. 571 (adopting Report and Recommendation (“Report”), ECF No. 555).¹ The Court noted that it was objectively reasonable for Quicken Loans to rely on a WHD opinion letter, that Quicken Loans evaluated the text of the letter carefully compared to other Department of Labor guidelines and other laws and cases, and that Quicken Loans acted in conformity with the letter. As such, no reasonable jury could conclude that Quicken Loans did not act in good faith reliance on FLSA 2006–31. Report at 24–33.

The Court also initially chose to award FLSA 2006–31 a controlling degree of deference. Henry, Report and Recommendation 39, July 16, 2009, ECF No. 556 (citing Auer v. Robbins, 519 U.S. 452, 461–62, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997); Fazekas v. Cleveland Clinic Found. Health Care Ventures, Inc., 204 F.3d 673, 676–79 (6th Cir.2000)). Once AI 2010–1 issued, the Court considered the matter anew with additional briefing by the parties, and an amicus brief from the U.S. Department of Labor regarding what, if any, level of deference the Court owed AI 2010–1 in interpreting the relevant regulations. After a hearing, the Court ultimately denied Defendants' motion for reconsideration of the legal conclusion on January 27, 2011, finding that, based on a revised assessment of the administrative exemption regulation and the interpretative guidance, first, although the parties agreed that AI 2010–1 rescinded FLSA 2006–31, the rescission did not have retroactive effect; and second, that FLSA 2006–31 was not entitled to deference by the Court. But even so, the Court concluded the change in deference would not affect the Court's prior rulings in the case, and accordingly the Court denied the motion for reconsideration. Henry, Order Denying Mot. for Reconsideration 27, ECF No. 666 (“the Court reaffirms its conclusion that summary judgment for Quicken on the issue of good faith reliance was proper”).

In the instant case, the Court again granted Defendants' motion for summary judgment for the same period as to the instant plaintiffs, adopting the reasoning of its ruling in Henry after concluding that because “[t]here is no dispute that the factual and legal issues” in Defendants' motion for summary judgment are “identical to the issues” in Henry, stare decisis required an identical result. Order Granting Mot. for Summ. J. on Good Faith Defenses 4, ECF No. 113 (citing Rutherford v. Columbia Gas, 575 F.3d 616, 617 (6th Cir.2009)).

II. The D.C. Circuit's Opinion Vacating AI 2010–1

In Mortgage Bankers Ass'n. and Jerome Nickols, et al. v. Thomas Perez, No. 11–0073 (D.D.C.), plaintiffs Mortgage Bankers Association (“MBA”) and intervenors Jerome Nickols, et al., challenged the validity of AI 2010–1. The MBA brought the action under Section 702 of the Administrative Procedures Act (“APA”), see5 U.S.C. § 702. The MBA argued that the Department of Labor violated the APA when it issued AI 2010–1 without first engaging in notice-and-comment rulemaking procedures. The district court initially dismissed the challenge in Mortgage Bankers Ass'n v. Solis, 864 F.Supp.2d 193, 195 (D.D.C.2012).

But the D.C. Circuit heard the appeal in Mortgage Bankers Ass'n v. Harris, 720...