Last year, we reported on the defense verdict in the Henry v. Quicken Loans case, in which a Detroit jury found that mortgage loan officers were not sales employees with limited decision-making authority. Instead, the jury found that the mortgage loan officers were subject to the FLSA’s administrative exemption and therefore not entitled to overtime. Last week, the Sixth Circuit Court of Appeals affirmed the jury's verdict.
After hearing 40 witnesses testify during the five-week trial, the jury made two key findings in Quicken’s favor. First, the jury found that the plaintiff loan officers’ primary duty involved “work directly related to the management or general business operations” of Quicken or its customers. Second, the jury found that the plaintiff loan officers exercised discretion and independent judgment with respect to matters of significance.
On appeal, plaintiffs argued not only that the evidence did not support the verdict, but also that the question of whether the mortgage loan officers were eligible for the administrative exemption was not one of fact to be resolved by the jury; rather, plaintiffs advocated that the determination of whether the administrative exemption applies is a question of law for the court to decide (and thus was subject to de novo and not clear-error review).
Not surprisingly, the Sixth Circuit declined to disturb the jury’s verdict, holding that there was “ample evidence” to support a finding in Quicken’s favor. As is often the case, the Sixth Circuit deferred to the credibility determinations the jury made after hearing conflicting testimony from multiple witnesses about the loan officers’ day-to-day job duties.
Perhaps more importantly for employers, the Sixth Circuit also rejected the notion that application of the administrative exemption is necessarily a matter of law subject to de novo review. Rather, the Court explained, where there are material fact disputes about which duty is primary, the determination is factual and thus falls squarely within the province of the jury. To be sure, the Court acknowledged, the exemption determination can be made as a matter of law in those cases where there are not material factual disputes as to what duties are primary.
In its decision, the Sixth Circuit joins the Tenth Circuit in concluding that the primary duty determination is factual. While these decisions may be relied upon by plaintiffs to defeat defense motions for summary judgment, there is a significant upshot for employers seeking to defeat collective or class certification in misclassification cases. Indeed, fact-intensive inquiries ill-suited for summary judgment may be similarly inappropriate for determination on a class-wide basis. The Court’s decision therefore provides another avenue for employers to defeat certification when there is conflicting evidence about the workers’ primary job duty.
In addition, demonstrating that there are disputed issues of fact regarding primary duties may also work to an employer’s advantage on the merits in FLSA cases that rely on a hyper-technical reading of the FLSA or its regulations. In that situation, avoiding entry of summary judgment in favor of plaintiffs and proceeding to trial very well may tip the scales of justice in favor of the defense. Indeed, at trial in such cases, an employer often has the more sympathetic position, particularly where the plaintiffs are highly paid.