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Perry v. National City Mortgage

June 21, 2007


The opinion of the court was delivered by: Herndon, District Judge



Plaintiff Derrick Perry has filed a Motion for Conditional Collective Action Certification Pursuant to 29 U.S.C. § 216(b) and Court Authorized Notice (Doc. 31), with incorporated supporting memorandum. Defendant National City Mortgage, Inc., has timely opposed (Doc. 42), to which Plaintiff has replied (Doc. 43). Based on the following, the Court grants Plaintiff's Motion.

Plaintiff was employed by Defendant as a Loan Originator, or Loan Officer, from approximately September, 2004 until December, 2005, at Defendant's Swansea and Shiloh, Illinois locations (Doc. 1, ¶ 3; Doc. 8, ¶ 2). Plaintiff has filed suit*fn1 (Doc. 45) on behalf of himself and others similarly situated, pursuant to the Fair Labor Standards Act of 1938 ("FLSA"), as amended, 29 U.S.C. § 201 et seq. (Doc. 1, ¶ 1), for Defendant's failure to compensate for any of the substantial overtime hours worked by Plaintiff and other similarly situated employees. Plaintiff bases his claim upon the theory that Section 13 of the FLSA, 29 U.S.C. § 213, does not apply to exempt loan originators from overtime pay obligations, as set forth under Section 7(a)(1) of the FLSA (Doc. 1, ¶ 22).

Plaintiff proposes notice to the class in accordance with the sample formats recommended by the Federal Judicial Center (Doc. 31, p. 10). Further, Plaintiff seeks collective action conditional certification for the following class of similarly situated persons:

All current and former retail Loan Originators employed by National City or any of its related entities within the previous three years. Specifically excluded from the class are: (1) wholesale loan originators; and (2) "inside" loan originators employed in call centers who were properly characterized as "nonexempt." (Id. at 5).


The FLSA allows an employee (or former employee) to bring an action against his or her employer on behalf of the employee and other employees similarly situated. 29 U.S.C. § 216(b). A collective action under the FLSA preempts and also differs significantly from the class action procedure under FEDERAL RULE OF CIVIL PROCEDURE 23 in that a similarly situated employee does not become a plaintiff in a case proceeding under § 216(b) (and thus is not bound by a subsequent judgment) "unless he gives his consent in writing to become such a party" and files a consent in the court where the action is pending. 29 U.S.C. § 216(b); see King v. General Electric Co. 960 F.2d 617, 621 (7th Cir. 1992)(citation omitted). In other words, a collective action under the FLSA requires a more proactive approach: putative class members must "opt in" to participate, whereas putative class members in a proceeding under Rule 23 remain class members unless they "opt-out." The Supreme Court has found that the FLSA allows district courts discretionary authority to "facilitat[e] notice to potential plaintiffs" in a collective action. Hoffman-La Roche, Inc., v. Sperling, 493 U.S. 165, 170, 110 S.Ct. 482, 486 (1989).

An ad hoc two-step process is commonly applied by district courts in determining whether to conditionally certify a collective action under the FLSA. See Mielke v. Laidlaw Transit, Inc., 313 F. Supp. 2d 759, 762 (N.D. Ill. 2004)(Castillo, J.)(collecting cases); Flores v. Lifeway Foods, Inc., 289 F. Supp. 2d 1042, 1045 (N.D. Ill. 2003)(Norgle, J.). See also Thiessen v. General Electric Capital Corp., 267 F.3d 1095, 1105 (10th Cir. 2001); Hipp v. Liberty Nat'l Life Ins. Co., 252 F.3d 1208, 1218 (11th Cir. 2001); Austin v. CUNA Mut. Ins. Soc., 232 F.R.D. 601, 605 (W.D. Wis. 2006)(Crabb, J.).*fn2 The first step, or "notice" step, requires the Court determine whether potential class members are "similarly situated" and should be given notice and the opportunity to opt-in.

Mielke, 313 F. Supp. 2d at 762. This determination should not involve adjudication of the merits of the claims, but instead, allows for a more "lenient" analysis of whether potential class members are "similarly situated."Id. As the Seventh Circuit has yet to set forth the analytical parameters to determine whether a person is "similarly situated,"other courts have adopted the "modest factual showing" standard, which requires the moving plaintiff "to demonstrate that they and potential plaintiffs together were victims of a common policy or plan that violated the law." Flores, 289 F. Supp. 2d at 1045; see also Gambo v. Lucent Technologies, Inc., Case No. 05-c-3701, 2005 WL 3542485 at *4 (N.D. Ill. Dec. 22, 2005)(Filip, J.).Thus, a Court may conditionally certify a collective action class. After discovery has ensued, a more stringent, factual determination regarding members of the class are "similarly situated" can be made upon a party's motion to "decertify" the class. Milke, 313 F. Supp. 2d at 762 (citing Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1213-14 (5th Cir.1995)).


A. Conditional Certification

Plaintiff's claim is that Defendant violated the FLSA by failing to compensate for overtime hours worked, by way of incorrectly classifying Plaintiff and other Loan Originators as "exempt employees." Plaintiff believes that "others similarly situated" should include current and former Loan Originators employee by Defendant or its related entities within the last three years, excluding Wholesale and Inside Loan Originators.Earlier in this case, the Magistrate Judge issued an Order allowing for "[d]iscovery relating to conditional certification"(Doc. 25). Through discovery requests, Defendant produced a computer-generated list of approximately 5,500 Loan Originators within the past three years; Plaintiff believes all on this list should be conditionally classified as "similarly situated" for the purposes of receiving notice of this collective action (Doc. 31, p. 4). Bolstering this belief is Plaintiff's assertion that all 5,500 Loan Originators (currently or formerly) employed by Defendant have the same job description, including the same "basic mission," "nature and scope," and "principle accountabilities" (Doc. 31, p. 4, citing Exs. F, G & H - job descriptions for Derrick Perry, Tammy Kerr and Larry Hendricks). Further, Plaintiff states that the computer-generated list produced by Defendant shows that all 5,500 Loan Originators were characterized as "exempt" under the FLSA under a single company policy (Id.). Lastly, Defendant's Loan Originators were expected to work at least forty hours per week and were not compensated for any time worked in excess of forty hours (Id. at 4-5).

Opposing Plaintiff's assertions, Defendant argues that its Loan Originators are not "similarly situated" and therefore allowing conditional certification of the 5,500 on the list would result in a class that was overbroad*fn3 (Doc. 42). Defendant clarifies that all of its Loan Originators are classified as either a Level I, II, III or IV, based on years of industry experience. Thus, a Loan Originator IV (the highest of the four levels) would be expected to already have a decent client base and should be able to generate more annual production volumes than a lower-level Loan Originator. Defendant further argues that the job duties amongst these 5,500 Loan Originators are "materially different (Id. at 2). Although Defendant admits that the job descriptions for all Loan Originators, including "basic mission," "nature and scope" and "principle accountabilities" are the same, it asserts that the job descriptions do not provide a complete "description of day-to-day functions performed by Loan Originators" (Id. at 4). Rather, Defendant explains that some lesser experienced Loan ...

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