Gina McKeen-Chaplin, individually, on behalf of others similarly situated, and on behalf of the general public, Plaintiff-Appellant,
Provident Savings Bank, FSB, Defendant-Appellee.
and Submitted April 21, 2017 San Francisco, California
from the United States District Court No.
2:12-cv-03035-GEB-AC for the Eastern District of California
Garland E. Burrell, Jr., District Judge, Presiding
Matthew C. Helland (argued) and Daniel S. Brome, Nichols
Kaster LLP, San Francisco, California; for
Michael L. Ludwig (argued), Howard M. Knee (argued), and
Caitlin Sanders, Blank Rome LLP, Los Angeles, California, for
Before: Sidney R. Thomas, Chief Judge, Mary H. Murguia,
Circuit Judge, and Michael M. Baylson, [*] District Judge.
the district court's grant of summary judgment in favor
of the defendant in an action under the Fair Labor Standards
Act, the panel held that mortgage underwriters were entitled
to overtime compensation for hours worked in excess of forty
the analysis used by the Second Circuit, rather than the
Sixth Circuit, the panel held that, because the mortgage
underwriters' primary job duty did not relate to their
employer bank's management or general business
operations, the administrative employee exemption to the
Act's overtime requirements did not apply.
THOMAS, Chief Judge.
appeal presents the question of whether a class of mortgage
underwriters are entitled to overtime compensation under the
Fair Labor Standards Act ("FLSA" or "the
Act"), 29 U.S.C. § 201 et seq., for hours
worked in excess of forty per week. We conclude that, because
the mortgage underwriters' primary job duty does not
relate to the bank's management or general business
operations, the administrative employee exemption under 29
U.S.C. § 213(a)(1) and 29 C.F.R. § 541.200(a) does
not apply,  and the underwriters are entitled to
Savings Bank ("Provident" or "the Bank")
sells mortgage loans to consumers purchasing or refinancing
homes and then resells those funded loans on the secondary
market. Mortgage underwriters at Provident review mortgage
loan applications using guidelines established by Provident
and investors in the secondary market, including Fannie Mae,
Freddie Mac, and the Fair Housing Administration.
transactions begin with a loan officer or broker who works
with a borrower to select a particular loan product. A loan
processor then runs a credit check, gathers further
documentation, assembles the file for the underwriter, and
runs the loan through an automated underwriting system. The
automated system applies certain guidelines based on the
information input and then returns a preliminary decision.
From there, the file goes to a mortgage underwriter, who
verifies the information put into the automated system and
compares the borrower's information against the
applicable guidelines, which are specific to each loan
underwriters are responsible for thoroughly analyzing complex
customer loan applications and determining borrower
creditworthiness in order to ultimately decide whether
Provident will accept the requested loan. They may impose
conditions on a loan application and refuse to approve the
loan until the borrower satisfies those conditions. The
decision as to whether to impose conditions is ordinarily
controlled by the applicable guidelines, but the underwriters
can include additional conditions. They can also suggest a
"counteroffer"-which would be communicated through
the loan officer-in cases where a borrower does not qualify
for the loan product selected, but might qualify for a
different loan. Underwriters may also request that Provident
make exceptions in certain cases by approving a loan that
does not satisfy the guidelines.
mortgage underwriter approves a loan, it is sent to other
Provident employees who finalize the loan funding.
Underwriters say that whether a loan is funded ultimately
depends on factors beyond the underwriter's control.
Another group of Provident employees sells funded loans in
the secondary market.
behalf of herself and a class of mortgage underwriters, Gina
McKeen-Chaplin brought this action seeking overtime
compensation under FSLA. The district court conditionally
certified an opt-in class of current and former mortgage
underwriters at Provident. Initially, the district court
denied cross motions for summary judgment and set the case
for trial. But later, on the parties' joint motion for
reconsideration, the court concluded that the underwriters
qualify for the administrative exemption, based on finding
that their primary duty included "quality control"
or similar activities directly related ...