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Marting v. Crawford & Co.

March 14, 2006

KIMBERLY A. MARTING, PLAINTIFF,
v.
CRAWFORD & CO., DEFENDANT.



The opinion of the court was delivered by: Judge John A. Nordberg

MEMORANDUM OPINION AND ORDER

Plaintiff Kimberly Marting worked as a claims adjuster for defendant Crawford & Company for ten years until she left in May 2000. She was then making about $70,000 a year, which included a bonus of around $20,000. Later that year, in October 2000, she filed a lawsuit in this District, alleging that she left the company only because she was sexually harassed and then retaliated against for complaining about that harassment. In that lawsuit, she also alleged that she was paid significantly less than male claims adjusters at Crawford who were less qualified and experienced than she was. That lawsuit was assigned to a different Judge and later terminated in Crawford's favor on summary judgment.

A month after filing that lawsuit, plaintiff filed this lawsuit, a collective action complaint under the Fair Labor Standards Act, alleging that she and the other Crawford claims adjusters were not paid overtime. Earlier in the lawsuit, Crawford filed a motion to dismiss in which it argued that, as a matter of law, casualty claims adjusters are exempt under the FLSA. Finding that this is a fact intensive inquiry, we denied the motion. Plaintiff later filed a motion for initial notice to the proposed opt-in class. After briefing, we denied that motion because plaintiff had not provided sufficient evidence to justify sending notice to what would be a large number of employees working at 400 branch offices. Discovery ensued and the parties have now filed cross-motions for summary judgment. Because these two motions were briefed on separate tracks and the parties were also allowed to file oversized briefs, both sides have had ample opportunity to present their arguments.

In its briefs, Crawford argues generally that plaintiff's job as a claims adjuster involved discretionary and important duties -- determining initial coverage, making liability determinations or recommendations, and trying to negotiate and settle claims within defined limits -- that are of the type that most courts have held fall with the FLSA's administrative exemption.

In her briefs, plaintiff argues that her job title was a misnomer and that she had little discretion because she had to follow strict rules and regulations of both Crawford and its clients and because her work was closely reviewed by her supervisors. She claims that she was like a "foot soldier" in Crawford's "army" or alternatively like an assembly line worker who follows strict rules and has no authority to deviate from the script.

We are thus presented with two sharply contrasting portrayals. Simply stated, the issue boils down to whose version is correct under the undisputed material facts. Was plaintiff a claims adjuster in the traditional sense, a person who made important discretionary decisions as part of her investigation, or was she merely an assembly line worker mechanically following orders? Under the applicable case law and regulations, as described below, if plaintiff was a claims adjuster in the former sense, then her position was exempt and she cannot recover in this lawsuit. If the latter description is the correct one, then the exemption does not apply.

Although the parties offer sharply contrasting pictures, they largely rely on the same body of evidence consisting of the deposition testimony of plaintiff and three Crawford supervisors -- Curtis Harris, Lawrence Hinkel, and David Martin. Plaintiff also relies on a large number of exhibits, submitted in three bound volumes, which consist primarily of documents produced by Crawford that plaintiff claims make up the strict rules and regulations that allegedly limited her discretion. Plaintiff also relies on her affidavit, signed many years after her deposition.

FACTUAL BACKGROUND

In addition to operating several other lines of business, Crawford is a third-party claims administrator servicing property and casualty claims for other insurance companies and underwriters. Crawford is not itself an insurance company or underwriter, but instead conducts investigations on behalf of its clients, which include companies such as Great West, Tyson Foods, Liberty Mutual, RLI Transport, and Unitrin.

Plaintiff worked at Crawford's Schaumburg, Illinois office from 1990 through May 2000. Except for one five-month period in which she worked as a supervisor, a position she found boring, plaintiff was employed as an adjuster.

Plaintiff spent most of time out in the field conducting investigations. She always did this by herself and was never accompanied by a supervisor.*fn1 Her duties typically involved taking a statement from the claimant, canvassing the scene for witnesses and interviewing them if necessary, photographing the accident scene, locating various records including police reports and medical bills, serving as a liaison between the vehicle appraiser and the claimant, and writing one or more reports to the clients. She was also involved the settling of some claims, although the degree of her involvement is the subject of much dispute. There is a also dispute as to whether she was required to determine coverage or make assessments about liability.

Crawford's Rules And Regulations. Plaintiff's argument that she had no discretion rests heavily on her assertion that Crawford effectively took away any discretion through a heavily regimented system of rules and regulations. To support this argument, plaintiff has submitted many and varied documents consisting of internal guidelines, form letters, slides, book excerpts, lecture notes, regulations, and portions of training manuals. These documents are numerous and make up a large portion of the 84 exhibits submitted by plaintiff with her response brief.

Unfortunately, plaintiff has given little effort to presenting these documents in a clear or organized way, which in turn has required this Court to spend unnecessary time to sort through them. Perhaps the best way to begin is to just list those exhibits that plaintiff contends make up these "strict rules and regulations":

Crawford & Company Casualty Service Standards (Ex. 18); Crawford & Company -- Forms (Ex. 25); Recorded Statement Summary Form (Ex. 27); Denial Form Letter (Ex. 29); Photo Mounting Sheet (Ex. 31); a two-page excerpt from a book entitled "The Claim Function" (Ex. 32); Principals of Insurance Lecture Outline (Ex. 33); Reviewing An Automobile Appraisal (Ex. 36); Reviewing A Body Shop Estimate (Ex. 37); Auto Accident Investigation (Ex. 38); Truck Accident Investigation (Ex. 39); Interpersonal Skills (Ex. 40); Negotiating Claim Settlements Lecture Outline (Ex. 41); Release Of All Claims (Ex. 42); Transmittal Reporting Procedure (Ex. 43); Dictation (Ex. 44); Analysis Of A Full Formal Report (Ex. 45); How To Deal With Lawyers, Doctors and Other Adjusters -- Lecture Outline (Ex. 46); Crawford & Company Casualty Service Standards (Ex. 47); Liability Training Class Reserves (Ex. 48); Reserves (Ex. 49); Reporting Guide (Ex. 50); Negotiating For Insurance Adjusters (Ex. 51); Truck Liability Accident Investigation Procedural Guidelines (Ex. 52); Auto Accident Investigation (Ex. 54); Photographs (Ex. 55); The Recorded Statement (Ex. 56); Statement Guides (Ex. 57); Drawing Diagrams (Ex. 58); Vehicle Damages (Ex. 59); Reserves (Ex. 60); Negotiating Claim Settlements (Ex. 61); Release of All Claims (Ex. 62); Dictation (Ex. 64); Slides "For the Defense, 1/97" (Ex. 65); Crawford & Company -- Forms (Ex. 66); Transmittal Reporting Procedure (Ex. 74); and a Confidential Premises Slip & Fall Outline (Ex. 84).

The first problem with this stack of documents is that plaintiff has not provided any context. In many cases, we cannot tell who the author of the document is, its date, its purpose, or what the larger document is from which the exhibit was taken. Exhibit 33, for example, consists of pages 12 through 17 of a lecture outline. There is no date. We do not know who gave the lecture. Most of these documents have no date at all. Those documents that do have a date have a wide range from 1987 to 1999. There is no indication how these documents were used, and no evidence that they were even kept at Crawford's Schaumburg, Illinois office. It appears that some of them may have been used in training sessions (plaintiff says that she attended a training session in Atlanta in 1990 when she started with the company) but given the varying dates we cannot tell whether plaintiff ever received them.

This leads to a second and larger problem. There is little connection between this stack of documents and plaintiff. At her deposition, plaintiff was repeatedly asked to identify the documents that supposedly constituted the "strict rules and regulations" referred to in Paragraph 7 of her complaint and she typically responded that she could not remember what these documents were or alternatively that the rules and regulations were actually given verbally rather than in written form. See, e.g., Dep. 90, 94, 134. For example, even though three of these exhibits refer to settlement, a key issue in this case, plaintiff never mentioned them in her deposition and stated that the rules she followed regarding settlement were "verbal." (Id. 94.) Another telling example is the fact that plaintiff in her deposition was given a copy of Crawford's Casualty Service Standards, a document mentioned prominently in her briefs, and asked whether she had ever seen it before. She answered: "It does not look familiar." (Dep. 146; see also id. 43 ("I can't recall seeing it").)*fn2 While it does appear that these documents were produced by Crawford and thus may have been used to train and guide adjusters, plaintiff gives little effort to establishing this connection.

A third and final problem with these documents is the way plaintiff has chosen to present them. In reading through these documents the first time, we had the sense that many of them were very similar. Upon closer examination, we discovered that many of these exhibits are copies (or nearly identical versions) of the same earlier exhibit. For example, there are two guides labeled "Dictation" that are largely the same (Ex. 44 and 64); two documents entitled Transmittal Reporting Procedures(Ex. 43 and 74); two documents entitled Auto Accident Investigations (Ex. 38 and 54), and two Crawford Casualty Service Standards (Ex. 18 and 47). There are also two large exhibits (Ex. 25 and 66) labeled Crawford & Company Forms, both of which are over 70 pages and are nearly identical. Not only has plaintiff included this large group exhibit twice, she has then compounded this first level of duplication with another. She pulled out a number of the individual form letters included in these group exhibits, which themselves are identical, and then attached them individually as stand-alone exhibits.*fn3 The upshot is that plaintiff has in some cases attached the same document as an exhibit four separate times. So we have four different copies, for example, of the Photo Mounting Sheet, which is a one page document that merely provides the adjuster with two blank spaces to attach photographs. See Ex. 25, 31, 66, 73. Likewise, the exact same General Medical Request Form Letter, which like the Photo Mounting Sheet is an innocuous and unimportant form letter that has no bearing on the key issues in this case, is also included as four separate exhibits. Ex. 25, 26, 66, 67. And they are all identical. At a minimum, this sloppy presentation reflects lack of care and professionalism and has wasted this Court's resources. At worst, it represents an intentional effort to create a false impression. As discussed below, given that many of these documents directly undermine plaintiff's case, it is perhaps more likely that counsel simply did not spend the time reading them very carefully.

Client Service Standards. Plaintiff also has alleged that her discretion was limited by the fact that, in approximately two-thirds of the cases, she was required to follow specific client guidelines in addition to Crawford's own rules and regulations. These guidelines, known as client service parameters, also contained general and specific advice about how the investigation should be conducted. Plaintiff has attached several of these clients service parameters. See Ex. 19, 20, 21.

Futurity Review. Plaintiff, as one of her other major arguments, emphasizes the fact that Crawford had a supervisory review system know as the "futurity review." Futurity review is a process whereby a supervisor checks on the progress of each investigation for each adjuster. Futurity review is very important, and a branch manager may be fired if he or she were not "reading futurities" properly. (P23.)

According to Lawrence Hinkel, who is a branch manager and who testified as Crawford's 30(b)(6) witness, a supervisor conducting a futurity review would [make] sure that [the adjusters] have touched upon the issues that are pertinent to [the] loss. [I]f they were asked to get a police report, have they achieved, you know, that component of the assignment, have they secured the statements that have been requested from the parties, et cetera. I mean, that's basically what you look for [] through the futurity process[,] have they achieved what they have been asked to do and in a timely fashion. (Dep. 16.) Curtis Harris described this process in more general terms: "It's just a review by supervisory personnel to make sure that files are reported timely and investigation is done properly." (Dep. 37.) When asked what were some of the specific mistakes commonly uncovered in a futurity review, he stated: "One of the largest was the timeliness issue, not doing things on time that needed to be done, and omitting important parts of investigative work." (Dep. 21-22.) David Martin stated that he would typically pull the physical file and look at the original instructions given by the client and make sure that they had been followed. (Dep. 25.) According to Martin, supervisors would conduct futurity reviews once every two weeks for the newer people and once a month for more experienced people because "there's a little more independence in what they do." (Dep. 26.) Plaintiff has attached as Exhibit 77 one futurity review, which consists of one-line entries for each claim with various columns, the last one allowing for handwritten comments by the supervisor.

All correspondence and reports to clients would be reviewed by a supervisor. David Martin stated that if there were errors discovered in a futurity review, he "would bring it to the adjuster's attention because obviously the report couldn't go out incorrect." (Dep. 111.)

DISCUSSION

Under the Fair Labor Standards Act, if an hourly-wage employee works more than 40 hours in one week, her employer must pay her one and a half times her regular wage for each additional hour worked. See 29 U.S.C. § 207(a)(1); Kennedy v. Commonwealth Edison Co., 410 F.3d 365, 369 (7th Cir. 2005). But there is a "significant exception" to this rule. Id. It does not apply to employees who are "employed in a bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213(a)(1); Kennedy, 410 F.3d at 367 (the FLSA's "protections do not extend to everyone."). Such employees are exempt from the FLSA.

Under the Department of Labor regulations applicable at the time of this case, which have been subsequently changed, there is a long and short test for determining whether an employee was exempt. Id. at 370. The parties agree that the short test applies here. It has three requirements. The first requirement -- whether plaintiff was a salaried employee -- is not in dispute. This case therefore turns on whether Crawford can meet its burden of showing that the latter two requirements have been met. They are:

(i) whether plaintiff's job duties "consist primarily of office or non-manual work directly related to management policies or general business operations" of either Crawford or its customers, and

(ii) whether plaintiff's job included work "requiring the exercise of discretion and independent judgment." 29 C.F.R. ยง 541.214. Following the lead of the Seventh Circuit in Kennedy, we will refer to the first requirement listed above as the primary duty test and to the second ...


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