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Bienvenido Franco, William v. Ideal Mortgage Bankers

January 28, 2011


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


On September 21, 2007, Plaintiff Bienvenido Franco on behalf of others similarly situated ("Plaintiffs"), sued Ideal Mortgage Bankers, Ltd., d/b/a Lend America ("Lend America"), alleging that Ideal violated the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201, et. seq., by failing to pay its loan officers minimum wages and overtime. Plaintiffs later amended their Complaint to also name four Individual Defendants: Michael Ashley, Timothy Mayette, Helene DeCillis, and Michael Primeau. The Court has conditionally certified this case as an FLSA collective action.

Plaintiffs have now moved for partial summary judgment. Specifically, Plaintiffs seek summary judgment declaring that: (1) the FLSA's exemptions do not apply to most class members; (2) Defendants Ashley, DeCillis, and Primeau are individually liable as FLSA "employers"; (3) Plaintiffs are entitled to liquidated damages; and (4) Defendants' conduct was willful, thereby expanding the statute of limitations to three years. In addition, Plaintiffs seek an interim award of attorneys' fees.

For the following reasons, Plaintiffs' motion is GRANTED IN PART AND DENIED IN PART.


I. Summary

This is an FLSA minimum wage and overtime case.

Before going out of business, Lend America was a mortgage banker, and employed the Plaintiffs as "loan officers."*fn1 Most Plaintiffs were "inside sales" officers, meaning that they performed their job at one of Lend America's offices. (Pl. 56.1 Stmt. ¶ 5.)*fn2 Plaintiffs contend that Lend America violated the FLSA by not paying these inside sales officers minimum wages and overtime. In this regard, Plaintiffs contend that no other FLSA exemption covers the inside sales officers. Finally, Plaintiffs contend that the Individual Defendants each had sufficient control over Lend America, and its employment practices, to render them individually liable under the FLSA.

As discussed below, however, it is difficult to provide a more comprehensive statement of the facts. For, after reviewing the parties' Rule 56.1 Statements, it appears that few facts are truly and/or fully undisputed.

II. Plaintiffs' Rule 56.1 Statement

Plaintiffs' Rule 56.1 Statement contains 74 paragraphs of purportedly undisputed facts. But, in significant part, Plaintiffs' citations to the record do not support the listed factual claims. And, even when Plaintiffs' citations do support their factual contentions, Defendants' Rule 56.1 Statements frequently demonstrate that significant factual disputes exist. Consequently, the Court does not credit much of Plaintiffs' Rule 56.1 Statement.

On the whole, Plaintiffs' Rule 56.1 Statement suffers from several global flaws.*fn3 First, Plaintiffs rely heavily on Defendant Timothy Mayette's deposition testimony. But Mr. Mayette worked for Lend America only from September 2003 to June 2004, and again from February 2005 to June 2005. (Mayette Tr. 14, 21, 25.) So, for most of the class period, Mr. Mayette's testimony has only limited probative value, at best.*fn4 Among other things, except for the brief periods of his employment, Mr. Mayette cannot competently testify about whether Lend America paid minimum wages or overtime before May/June 2008. (Pl. 56.1 Stmt. ¶¶ 2,3.)

Second, Plaintiffs significantly misstate both deposition testimony and Lend America's interrogatory responses. For instance, Plaintiffs claim that Lend America's Interrogatory Response ¶ 11 evidences Lend America's failure to pay minimum wages or overtime before May/June 2008. (Pl. 56.1 Stmt. ¶¶ 2, 3.) But Lend America's Interrogatory Response ¶ 11 states only that, after June 1, 2008, it modified its compensation plan to "guarantee[]" minimum wages plus overtime. This Interrogatory Response does not say that, before that date, no loan officers received minimum wages or overtime. And, in fact, the record supports that Lend America paid its loan officers in a variety of ways before June 1, 2008, with some receiving minimum wages and overtime. (DeCillis Tr. 75-76, 86; Tyler Decl. ¶ 7; Fried Decl. ¶ 3; Norris Decl. ¶ 3; Mayette Tr. 35.)

Likewise, Plaintiffs consistently misrepresent a witness' belief, speculation, or lack of memory as an uncontested fact. For instance, Plaintiffs cite Mr. Mayette's testimony to support that Lend America "did not pay its loan officers overtime." (Pl. 56.1 Stmt. ¶ 2.) But Mr. Mayette actually said that he didn't remember whether Lend America paid overtime. (Mayette Tr. 39.) Similarly, Plaintiffs cite Ms. DeCillis' deposition at pp. 109-110 to support their claim that Mr. Ashley hired and fired employees, including loan officers. (Pl. 56.1 Stmt. ¶ 22.) But, in the cited testimony, Ms. DeCillis actually stated that Mr. Ashley "probably" could fire a loan officer, merely "guess[ed]" that he could hire one, and agreed with counsel's statement that she "believe[d]" Mr. Ashley could give someone a raise.

In yet another example, Plaintiffs claim that Mr. Ashley "signed checks drawn from Lend America's bank accounts, including payroll accounts." But the cited testimony does not support that claim. Mr. Mayette only speculated that Mr. Ashley "possibly" signed checks. (Mayette Tr. 31.) And Ms. DeCillis represented only that Mr. Ashley had the authority to sign checks, not that he actually did so. (DeCillis Tr. 115.) In fact, Ms. DeCillis testified that Mr. Primeau, and not Mr. Ashley, signed the payroll checks. (Id.)

Third, even when not actually misstated, Plaintiffs frequently over-represent what the evidence supports. This is most telling in Plaintiffs' claims concerning the numbers of opt-in Plaintiffs who fit certain categories, such as those not paid minimum wages or who might be subject to the outside sales exemption. (Pl. 56.1 Stmt. ¶¶ 1, 6.)*fn5 Plaintiffs support these statements by referencing Lend America's Second Interrogatory Responses. But Lend America served this document on March 19, 2009. Thus, Lend America's responses do not include Plaintiffs who opted-in after that date. Likewise, Plaintiffs make several statements concerning Mr. Ashley and Ms. DeCillis entering into "contracts," (plural) "loan agreements," (plural) and "loans" (plural) on Lend America's behalf, when the cited testimony supports only that these Defendants signed a single loan agreement. (Pl. 56.1 Stmt. ¶¶ 30, 31, 47, 48; DeCillis Tr. 118-19.) And Plaintiffs further claim that Ms. DeCillis "changed the compensation plan for Lend America's employees," when, in fact, the cited testimony indicates only that Ms. DeCillis participated in a "group decision" along with five other executives. (Pl. 56.1 Stmt. ¶ 50; DeCillis Tr. 77-78.)

Fourth, Plaintiffs' purported "undisputed facts" sometimes resort to vague, conclusory language that ignores serious evidentiary ambiguities. For instance, Plaintiffs contend that Mr. Ashley "controlled" the sales force. (Pl. 56.1 Stmt. ¶ 18.) But, although citing Ms. DeCillis' deposition, this statement ignores Ms. DeCillis' clear testimony that only certain salespeople reported to Mr. Ashley, and that another employee had "day-to-day" supervisory responsibility over the loan officers. (DeCillis Tr. 42-43.)

Finally, even when Plaintiffs adequately support a factual contention, Defendants frequently point to evidence that places that fact in dispute. For instance, although Mr. Mayette testified that Mr. Ashley functioned as Lend America's CEO, Defendants identify deposition testimony that conflicts with Mr. Mayette's claim. (See DeCillis Tr. 26; Franco Tr. 94) (setting forth, respectively, that Mr. Primeau was CEO and "oversaw" the whole operation, while another executive, Joseph Forgione, was a "big honcho").

The end result is that Plaintiffs have set forth relatively few truly undisputed facts, especially for the period after June 2005.*fn6 The Court summarizes these facts below:

A. Lend America's Policies

Before June 1, 2008, Lend America did not pay minimum wages or a guaranteed minimum salary to some inside sales persons, and failed to keep accurate time records for its employees. (Pl. 56.1 Stmt. ¶¶ 1, 3, 4). On June 27, 2008, Lend America changed its compensation policy to guarantee minimum salaries, minimum wages, and overtime premiums (Pl. 56.1 Stmt. ¶10.) This change resulted from a "group decision" made by Mr. Ashley, Ms. DeCillis and four other executives. (Pl. 56.1 Stmt.¶¶ 33, 34, 50.) Contrary to Plaintiffs' claims, there is no undisputed evidence that Lend America failed to pay overtime to anyone at anytime.

B. Mr. Ashley

While Mr. Mayette worked for Lend America, Mr. Ashley had the power to hire and fire loan officers. During these time periods, Mr. Ashley maintained an "open door policy" to assist loan officers, could set loan officer compensation, and could enforce Lend America's wage and hour policies. In addition, Mr. Ashley personally determined Mr. Mayette's bonus, and spent company funds on luxury cars, private jets, and his auto racing business. (Pl. 56.1 Stmt. ¶¶ 22, 26, 28, 32, 33, 39.)

During the entire class period, Mr. Ashley hired and fired employees, but not necessarily loan officers. He did, however, conduct meetings with them, and could discipline or promote them. In addition, he could plan loan officers' work schedules, although he rarely exercised that authority, with other individuals having primary responsibility. Along with three other executives, Mr. Ashley played a role in determining loan officers' job duties. And, along with five other executives, he participated in the decision to change loan officer compensation in June 2008. More generally, Mr. Ashley had some involvement in Lend America's marketing policies. And he signed a loan agreement on Lend America's behalf. (Pl. 56.1 Stmt. ¶¶ 20, 22, 24, 25, 27, 30, 31, 33, 34, 36, 41 47, 48, 50.)

C. Ms. DeCillis

Ms. DeCillis served as Lend America's Chief Operating Officer. (Pl. 56.1 Stmt. ¶ 42.) In this capacity, she hired, fired, and disciplined some employees, but not necessarily loan officers. (Pl. 56.1 Stmt. ¶¶ 44, 45.) She did sometimes communicate with loan officers, such as to provide them with updates on Lend America's products. (Pl. 56.1 Stmt. ¶ 51.) As of February 1, 2008, she was the person at Lend America most knowledgeable about the decision to classify loan officers as exempt from the FLSA. (Pl. 56.1 Stmt. ¶ 43.) And, in June 2008, she participated in the "group decision" to change loan officer compensation. (Pl. 56.1 Stmt. ¶ 50.) More generally, she had the authority to sign Lend America checks, but never exercised this authority. (Pl. 56.1 Stmt. ¶ 46.) But she once signed a loan agreement on Lend America's behalf. (Pl. 56.1 Stmt. ¶¶ 47, 48.)

D. Mr. Primeau

The facts concerning Mr. Primeau are largely uncontested. Mr. Primeau failed to oppose summary judgment, and, with a few exceptions, neither Mr. Ashley nor Ms. DeCillis dispute Plaintiffs' version of the facts concerning Mr. Primeau. So, based on Plaintiffs' ...

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