"Bank of America Settles Overtime Class Action for $36 Million"
Daily Journal, August 27, 2015
Class argued that appraisers shouldn't be exempt from overtime pay in case against Bank of America subsidiary
By Gautham Thomas, Daily Journal Staff Writer
A group of real estate appraisers and Bank of America Corp. along with its appraisal subsidiary reached a $36 million settlement in a pending class action.
The 365 class members will receive an average gross recovery of about $100,000 each, according to plaintiff's attorney Bryan Schwartz of Bryan Schwartz Law. The preliminary settlement agreement, filed Monday in federal court, is subject to court approval onSept. 21.
The class action, filed under the Federal Labor Standards Act and for violations of the California Labor Code, contended that property appraisers employed by LandSafe Inc., a Bank of America subsidiary, should not be exempted from overtime pay and other labor protections. The settlement agreement came days before trial was scheduled to begin. Boyd v. Bank of America, CV13-0561 (C.D. Cal., filed April 9, 2013).
A previous portion of the case with a class of review appraisers settled in 2014 for $5.8 million.
U.S. District Judge David O. Carter on May 6 granted several motions for summary judgment on behalf of the plaintiffs, ruling staff appraisers for LandSafe were not subject to overtime exemptions under federal and state law.
LandSafe was seeking interlocutory review by the 9th U.S. Circuit Court of Appeals, but the motion is on hold pending the settlement, according to Schwartz.
"There is no 9th Circuit decision about real estate appraisers. There were none in the country before this [district court] decision," Schwartz said.
Robert Lewis, a spokesperson for McGuire Woods LLP, counsel for LandSafe and Bank of America, declined comment.
The plaintiffs contended that they were misclassified as salaried employees exempt from overtime pay and mandated meal breaks.
Overtime exemptions apply if an employee performs administrative or professional functions, is a learned professional or is classified as a highly-compensated employee. These exemptions require the application of discretion and independent judgment, something plaintiffs argued staff appraisers could not exercise.
"Appraisers aren't negotiating with anyone and they aren't making any decisions when it comes to money," said Schwartz. "It's not up to the appraiser whether the bank hands out a loan."
Schwartz pointed to the "administrative/production dichotomy" - because appraisers were engaged primarily with producing the company's product and not administrating the company's policy as a whole, they could not be considered exempt.
Similar employee classification cases in the mortgage industry have been decided both ways.
A previous misclassification case, Davis v. J.P. Morgan Chase & Co., 587 F.3d 529 (2d Cir. 2009), found mortgage underwriters to be non-exempt employees, but more recently, McKeen-Chaplin v. Provident Savings Bank, FSB, 12-CV03035 (E.D. Cal., filed Dec. 17, 2012) found mortgage underwriters to be exempt under federal labor law.
About half the class members in the settlement are in California, with the rest outside the state, according to Wilmer J. Harris of Schonbrun DeSimone Seplow Harris & Hoffman LLP, who worked with Schwartz on the class action.
"LandSafe is pleased to bring this matter to resolution," said Bank of America spokesperson Jumana Bowens in a prepared statement. "We continue to believe the past decision to classify staff appraisers, who are responsible for the analysis of each property, have assignments that clearly are professional in nature, and as such, the classification of these positions as exempt was appropriate. However, we agreed to settle to avoid further legal costs."
Bank of America acquired LandSafe in 2008 when it purchased Countrywide Financial Corp. Earlier this month, Bank of America sold LandSafe's appraisal services to Irvine data company CoreLogic, though the details of the sale have not been officially disclosed.
In August 2014, Robert Madsen, a former LandSafe appraiser, received a $56 million whistleblower payment from Bank of America's $16.65 billion mortgage fraud settlement. Bank of America and LandSafe used improper appraisal practices to inflate the value of bank-held mortgages, Madsen alleged.
Kyle Lagow, another former LandSafe appraiser, received a $14.5 million whistleblower payment in 2012 from a $1 billion Bank of America settlement. Lagow alleged that Countrywide, partner KB Home and LandSafe cooperated to inflate home appraisals.
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