Bloomberg BNA: $5.8 Million Settlement With Appraisers For BoA Subsidiary Gets Preliminary OK

Bloomberg BNA: $5.8 Million Settlement With Appraisers For BoA Subsidiary Gets Preliminary OK

“$5.8 Million Settlement With Appraisers For BoA Subsidiary Gets Preliminary OK”
The Bureau of National Affairs, June 27, 2014

Reproduced with permission from Daily Labor Report, 124 DLR A-2, 6/27/14. Copyright 2014 by The Bureau of National Affairs, Inc. (800-372-1033)
www.bna.com

By Anna Kwidzinski

A $5.8 million settlement covering overtime claims by about 368 review appraisers working for a Bank of America Corp. subsidiary received preliminary approval June 23 from a federal judge in California (Boyd v. Bank of America Corp., C.D. Cal., No. 8:13-cv-00561, 6/23/14).

The deal covers review appraisers who worked nationwide at Bank of America’s LandSafe Inc. from around 2009 or 2010, depending on the subclass, to the date of preliminary approval. The appraisers claimed they were misclassified as exempt from overtime pay under the Fair Labor Standards Act and California law.

A separate group of residential appraisers may be certified as a class sometime within the next few days, plaintiffs’ counsel Bryan J. Schwartz in Oakland, Calif., told Bloomberg BNA June 27.

Apart from monetary awards, the settlement agreement requires that Bank of America defendants reclassify the review appraiser position ”as non-exempt from federal and state wage and hour laws as soon as practicable, but, in any event, no later than December 31, 2014.”

The settlement ”appears to be fair, adequate and reasonable to the Class,” Judge David O. Carter of the U.S. District Court for the Central District of California said.

‘Warm Reception’ Expected From Class Members. Because no notice has been sent yet to class members, none of them have had a chance to object to or support the agreement, Schwartz said. But he added that claimants and counselors ”expect a very warm reception” because most settlement class members will get $10,000 each as an average net amount after fees and other costs have been deducted.

The Bank of America companies ”specifically deny any liability,” according to the settlement. Defense counsel declined to comment, but Bank of America spokesman Rick Simon wrote in a June 27 e-mail to BBNA, ”LandSafe is pleased to bring this matter toresolution.”

”We continue to believe the past decision to classify appraisal reviewers as exempt was correct,” Simon added. ”However, we view the settlement of claims related to this group as a fair resolution and agreed to settle to avoid further legal costs.”

Schwartz said he hopes the ”industry will pay attention to this trend to ensure review appraisers and appraisers are paid overtime when working long hours.”

Exemptions Challenged. The residential appraisers, who made on-site home value assessments, and review appraisers, who proofread their work, claimed that original parent company Countrywide and later purchaser Bank of America failed to pay them overtime when they regularly worked as many as 70 or 80 hours a week.

The appraisal employees argued that they shouldn’t have been classified as either administratively or professionally exempt from FLSA overtime mandates.

Although the administrative exemption calls for an employee to exercise some form of discretion, the appraisers contended that they couldn’t deviate from formulaic forms when assessing home values.

Despite the professional exemption calling for advanced knowledge customarily acquired through a ”prolonged course of specialized intellectual instruction,”the employees claimed that one could become an appraiser with just a high school diploma and a quick training course.

Some Started With Countrywide. According to the second amended complaint, some of the named plaintiffs began working at LandSafe in 2007, when it was still owned by Countrywide. Some claimants were also classified as exempt while still part of Countrywide, Schwartz said.

He added that for a long time a lot of these appraisers have been ”very frustrated with the extraordinary quantity of work and lack of overtime,” in situations where they sometimes literally worked around the clock to meet production quotas.

”A person is less likely to step forward if they feel like jobs are scarce and can’t risk losing their jobs,” Schwartz said, referring to the mortgage meltdown several years ago that led to increased layoffs and decreased mortgage originations.

Strong California Protections. The settlement agreement provides for a class representative incentive award of no more than $15,000. Attorneys’ fees shall not exceed about one-third of the gross settlement amount, or approximately $1.93 million of $5.8 million. The non-reversionary settlement allows for a cy pres award to Legal Aid Society-Employment Law Center, if there’s less than $50,000 in unclaimed funds. Of the total $5.8 million settlement amount, California’s Labor and Workforce Development Agency is set to receive about $18,750, or around 75 percent of the $25,000 allocated as civil penalties under the California Labor Code Private Attorney General Act. Schwartz said the PAGA is part of the strong employee protections California law provides.

”California is very favorable to workforce protections both because of additional protective status and good jurisprudence from California courts,” Schwartz said. For example, California generally requires overtime to be paid after an eight-hour workday, rather than on a 40-hour-a-week basis outlined in the FLSA, Schwartz said. Another ”hotly litigated and very valuable” area of California law right now encompasses claims for missed meal and rest breaks, he added. A final fairness hearing is scheduled for Nov. 4, according
to the court order.

In addition to Schwartz, William C. Jhaveri-Weeks of Bryan Schwartz Law, P.C. in Oakland, Calif., and Schonbrun DeSimons Seplow Harris & Hoffman LLP attorneys Benjamin Schonbrun, Michael D. Seplow, and Aidan C.McGlaze in Venice, Calif., and Wilmer J. Harris in South Pasadena, Calif., represented the appraisal workers. Christopher A. Killens, Matthew C. Kane, Michael D. Mandel, and John A. Van Hook of McGuire Woods LLP in Los Angeles represented the Bank of America companies.

Contact the Reporter:
Anna Kwidzinski in Washington
akwidzinski@bna.com

Contact the Editor: 
Susan J. McGolrick at
smcgolrick@bna.com

Text of the order is available online.