District Court Properly Granted Defense Motion for Summary Judgment as to Class Action Claims on Behalf of Insurance Claims Adjusters because Undisputed Facts Established that Class of Employees Covered by Action Fell Within FLSA’s Administrative Exemption Seventh Circuit Holds
Plaintiffs filed a class action lawsuit against their employer, CC Services, alleging violations of the federal Fair Labor Standards Act (FLSA); specifically, the class action complaint alleged that defendant misclassified the class of employees on whose behalf the action was brought (four classes of insurance claims adjusters) in order to avoid paying them overtime. Roe-Midgett v. CC Services, Inc., ___ F.3d ___ (7th Cir. January 4, 2008) [Slip Opn., at 1-2]. Defense attorneys moved for summary judgment as to all of the class action claims, id., at 6. The district court granted the defense motion, id. In ruling against plaintiffs’ class action claims, the federal court applied “the Department of Labor’s so-called ‘short test’ for determining whether employees fall within the FLSA’s administrative exemption,” and “concluded that the primary duties of all four claims-processing positions involved matters (1) ‘directly related to management policies or general business operations’ and (2) ‘requiring the exercise of discretion and independent judgment.’” Id., at 2. Plaintiffs appealed, and the Seventh Circuit affirmed.
CC Services processes insurance claims for auto, home, commercial and farm insurers. Slip Opn., at 3. It operates out of 37 field offices, and in 2004 settled $600 million in claims, id. Each field office is staffed with Property Specialists, Field Claims Representatives, and Material Damage Appraisers (MDAs). Id. The Seventh Circuit noted that plaintiffs presented only limited arguments on appeal with respect to the district court’s summary judgment order concerning Property Specialists and Field Claims Representatives (II and III), id., at 2; as to those three classes, plaintiffs argued that material issues of disputed fact precluded summary judgment on the class action claims, “[b]ut they failed to identify any real factual dispute specific to these employees,” id. The Circuit Court focused, therefore, on the claim that the duties of MDAs failed to meet the requirements for exemption under the short test. Id. The Seventh Circuit summarized the jobs performed by MDAs and its conclusion at pages 2 and 3 as follows:
[MDAs] provide claims adjustment services for [defendant’s] insurance company clients up to a $12,000 limit of claims settlement authority and represent the “face” of CCS to the countless claimants with whom they interact. They spend much of their time in the field without direct supervision. They conduct on-site investigations of first- and third-party automobile insurance claims; interview claimants, witnesses, and law enforcement personnel; estimate loss; determine whether parts should be repaired or replaced; negotiate with mechanics and body shops and draft final repair estimates’ and settle claims up to the limit of their $12,000 settlement authority. These duties directly relate to CCS’s business operations and reflect a sufficient degree of discretion and independent judgment to qualify for the FLSA’s administrative exemption. Summary judgment was properly entered for CCS on all four classes of employees.
The author cannot improve on this concise summary. The author notes that the opinion provides a well-reasoned analysis of the factual issues presented and recommends that it be studied by all class action defense attorneys who defend FLSA class actions.