Professional Documents
Culture Documents
No. 14-2111
COMPANY;
GOVERNMENT
EMPLOYEES
Defendants Appellants,
and
GEICO CORPORATION; GEICO INDEMNITY COMPANY; GEICO CASUALTY
COMPANY; DOES 1-10,
Defendants.
No. 14-2114
COMPANY;
GOVERNMENT
EMPLOYEES
Defendants Appellees,
and
GEICO CORPORATION; GEICO INDEMNITY COMPANY; GEICO CASUALTY
COMPANY; DOES 1-10,
Defendants.
Appeals from the United States District Court for the District
of Maryland, at Greenbelt.
Roger W. Titus, Senior District
Judge. (8:10-cv-01958-RWT)
Argued:
Decided:
ARGUED: Pratik A. Shah, AKIN GUMP STRAUSS HAUER & FELD LLP,
Washington, D.C., for Appellants/Cross-Appellees.
Matthew Hale
Morgan, NICHOLS KASTER, PLLP, Minneapolis, Minnesota, for
Appellees/Cross-Appellants.
ON BRIEF: Eric Hemmendinger, SHAWE
& ROSENTHAL, LLP, Baltimore, Maryland; Hyland Hunt, AKIN GUMP
STRAUSS
HAUER
&
FELD
LLP,
Washington,
D.C.,
for
Appellants/Cross-Appellees.
Timothy
C.
Selander,
NICHOLS
KASTER, PLLP, Minneapolis, Minnesota, for Appellees/CrossAppellants.
Employees
Insurance
Company
and
GEICO
General
granting
denial
of
judgment
overtime
pay
against
under
them
the
in
Fair
an
action
Labor
asserting
Standards
Act
(FLSA), see 29 U.S.C. 201 et seq., and the New York labor
law (NYLL), see N.Y. Lab. Law 650 et seq.; N.Y. Comp. Codes
R. & Regs. tit. 12, 1422.2.
of
prejudgment
interest award.
interest
and
remand
for
We reverse the
a
prejudgment
Otherwise, we affirm.
I.
The
investigators
(the
plaintiffs
in
this
Investigators)
who
matter
are
currently
security
work,
or
Claims
investigating
Department
primarily
claims
that
are
29 U.S.C.
This case
the
facts
concerning
the
classification
in
the
Department
insurance
them.
claims
and
by
whose
primary
investigating,
job
it
is
assessing,
to
and
adjust
resolving
Investigators
work
in
GEICOs
Special
Investigations
report
to
Supervisors,
who
in
turn
report
The
to
becomes
involved
in
claim
An Investigator
when
other
Claims
The
2.
Identification
and
interviews
of
potential
witnesses who may provide information on the accuracy
of the claim and/or application.
3.
Utilizing industry recognized databases as deemed
necessary in conducting investigations.
4.
5.
Writing a concise and complete summary of the
investigation, including the investigators[] findings
regarding the suspected insurance fraud and the basis
for their findings.
Calderon v. GEICO Gen. Ins. Co., 917 F. Supp. 2d 428, 432 (D.
Md. 2012) (internal quotation marks omitted).
3
According
to
the
Insurance
Information
Institute,
approximately 10% of claims payments about $32 billion per
year for the insurance industry are for fraudulent claims.
See
Insurance
Information
Institute,
Insurance
Fraud,
http://www.iii.org/issue-update/insurance-fraud
(last
visited
Dec. 22, 2015) (saved as ECF opinion attachment).
Each
Investigator handles approximately 165 investigations per year.
6
GEICO
referral
requires
to
begin
Investigators
their
work
by
when
they
creating
receive
a
plan
of
claim
action
taking
photographs,
and
reviewing
property
damage.
of
obtaining
information,
the
insured
an
credibility
of
testimony.
the
witness
Although
GEICO
and
has
to
preserve
procedures
the
witnesss
governing
how
J.A. 1372.
that
reports
Adjusters
Investigators
with
generally
finalized.
facts
do
Instead,
substantiate
and
not
they
any
evidence.
review
However,
reports
generally
conclusions
base
once
their
in
Claims
they
are
decisions
addition
to
conducting
investigations,
finding
facts,
of
their
time
performing
other
duties.
They
from
the
field.
Also,
when
an
Investigator
is
And
finally,
the
when
an
investigation
reveals
problem
with
misclassified
its
auto
damage
Robinson-Smith
v.
GEICO,
323
adjusters
F.
Supp.
2d
as
exempt.
See
12
(D.D.C.
2004).
administrative
exemption.
See
Defining
and
Delimiting
and
Computer
Employees,
69
Fed.
Reg.
22,122
(Apr.
23,
2004).
In light of these events, GEICO Vice President of Claims
John
Geer
consider
whether
asked
under
the
GEICOs
the
head
reasoning
Investigators
of
SIU,
of
the
would
be
Steven
Rutzebeck,
Robinson-Smith
properly
to
opinion
classified
as
exempt.
of
decision
the
was
correct,
it
would
apply
to
GEICOs
Investigators as well.
Geer,
an
attorney,
questioned
the
correctness
of
the
group,
which
collectively
had
extensive
knowledge
of
as
exempt.
Accordingly,
GEICO
continued
the
See Smith v.
under
the
Investigators.
After
that
FLSA,
including
review,
which
that
lasted
of
one
the
or
two
months and which involved different executives than did the 2004
review,
GEICO
properly
again
classified
concluded
as
that
exempt
the
under
Investigators
the
were
administrative
exemption.
In
2010,
named
plaintiff
Samuel
Calderon
brought
damages
in
the
amount
of
their
The complaint
unpaid
overtime,
48
current
and
former
Investigators
joined
the
NYLL
by
opt-in
plaintiff
Tom
Fitzgerald
on
behalf
of
damages
the
in
complaint
the
amount
sought
of
liquidated
unpaid
damages,
overtime,
and
attorneys
the
amended
fees
and
discovery,
the
plaintiffs
moved
for
partial
that
the
Investigators
fell
within
the
FLSAs
In
its
discretion,
the
district
court
exercised
supplemental jurisdiction over the NYLL claims.
See 28 U.S.C.
1367; see Shahriar v. Smith & Wollensky Rest. Grp., 659 F.3d
234, 248 (2d Cir. 2011) (noting that the Seventh, Ninth, and
District
of
Columbia
Circuits
all
have
determined
that
supplemental jurisdiction is appropriate over state labor law
class claims in an action where the court has federal question
jurisdiction over FLSA claims in a collective action).
11
2d at 441-44.
The parties later filed cross-motions for summary judgment
on several disputed remedy issues.
the court ruled that because GEICO acted in good faith, GEICO
did not act willfully and thus the statute of limitations for
the plaintiffs claims extended only for two years.
reasons,
the
court
also
ruled
that
the
For similar
plaintiffs
were
not
And
district
court
then
entered
Stipulated
Order
J.A. 109.
The order
noted that both sides reserved the right to appeal the rulings
of the district court underlying the order and that the order
would have no effect unless a judgment of liability is entered
and sustained after all judicial review has been exhausted.
J.A. 109.
period.
The
order
further
stated
that
[t]he
J.A. 112.
resolution
parties
are
of
any
unable
to
issue
concerning
resolve.
J.A.
the
remedy
111.
that
There
was
the
no
subsequently
appealed
the
district
courts
order
facts
necessary
to
compute
the
amount
of
damages
to
be
lacked
appellate
jurisdiction;
accordingly,
we
Now the plaintiffs have once again appealed and GEICO has
cross-appealed,
with
each
party
we
possess
raising
the
same
issues
it
jurisdiction
to
consider
the
appeals,
see
Hellerstein v. Mr. Steak, Inc., 531 F.2d 470, 474 (10th Cir.
1976) (The general rule is that an interlocutory order from
which no appeal lies is merged into the final judgment and open
to review on appeal from that judgment.), which we will address
seriatim.
II.
GEICO
argues
that
GEICOs appeal
the
district
court
erred
in
granting
(1986); see also Shockley v. City of Newport News, 997 F.2d 18,
26
(4th
Cir.
1993)
(noting
that
the
significance
of
an
FLSA
and
spirit.
Desmond
v.
PNGI
Charles
Town
Gaming,
L.L.C., 564 F.3d 688, 692 (4th Cir. 2009) (Desmond I) (quoting
Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960)). 5
See
also Pugh v. Lindsay, 206 F.2d 43, 46 (4th Cir. 1953) (Since
the Act is remedial in nature, the exemptions contained therein
must
be
strictly
construed,
and
it
is
incumbent
upon
one
In this
n.3.
15
29
bona
capacity. 6
phrase.
fide
executive,
administrative,
29 U.S.C. 213(a)(1).
or
professional
The
current
regulations,
which
were
reissued
in
2004,
16
of
to
district
the
court
summary
addressed
judgment
all
motions
three
on
elements
the
issue
in
of
concluded
that
the
second
element
(the
directly
related
See id. at
It is
They explain
duty
that
the
employee
performs.
29
C.F.R.
http:/www.dol.gov/whd/overtime/NPRM2015/factsheet.htm
visited Dec. 22, 2015) (saved as ECF opinion attachment).
9
(last
this
part,
an
employees
primary
duty
must
be
the
19
29
on
the
type
of
work
(emphasis in original)).
performed
by
that
individual.
in
retail
or
service
establishment.
29
C.F.R.
directly
related
to
management
or
general
business
20
to
the
applicable
regulations
explain
that
the
servicing
advising
the
the
management,
business,
planning,
such
as,
for
negotiating,
example,
representing
the
administrative-production
analytical
tool
in
See,
dichotomy
service-oriented
Id.
is
an
employment
administrative,
administrative.
not
all
non-production-type
work
is
11
absolute
dichotomy
under
which
all
work
must
either
be
administration/production
dichotomy
been
determinative.).
of
work
not
directly
related
to
focus
regarding
this
assisting
with
the
element
remains
whether
an
opposed
to
the
mere
day-to-day
carrying
out
of
[the
In that
the
employees
ensured
that
the
horses
wore
had
the
proper
papers,
tattoos,
and
test
results;
22
noted
that
the
employees
indispensability
was
not
J.M. Benson Co., 789 F.2d 282, 287 (4th Cir. 1986)).
As for the
at
694.
We
concluded
that
the
employees
duties
were
29
C.F.R.
541.201(a)),
in
that
their
employer
23
function,
the
Investigators,
unlike
the
See
of
omitted)).
producing
But,
Investigators
claims.
like
primary
the
duty
(internal
employees
is
too
in
far
quotation
Desmond
removed
marks
I,
from
the
their
narrow
factual
submitted
to
questions,
GEICO
were
namely
whether
fraudulent.
Like
particular
the
racing
and
do
not
develop,
review,
evaluate,
or
the
Claims
Adjusters
24
in
processing
Id.
the
Rather, by
claims
of
day-to-day
public.
The
letters
carrying
out
of
[GEICOs]
affairs
to
the
Id.
applicable
support
regulations
this
and
Labor
interpretation.
Department
opinion
Specifically,
they
For
C.F.R.
541.3(b)(1)
(emphasis
added).
Subsection
25
officers.
Response
Appellants/Cross-Appellees at 23.
and
Reply
Brief
for
which the district court agreed with, see Calderon, 917 F. Supp.
2d at 440, GEICO specifically notes that the Labor Departments
stated purpose for adopting this provision was to clarify that
police
officers,
fire
fighters,
paramedics,
EMTs
and
other
69 Fed. Reg. at
identified
including
this
the
clarifying
Labor
Departments
regulation.
See
motivation
69
Fed.
Reg.
for
at
the
regulation
itself
suggest
that
the
Labor
Department
sector.
See
29
C.F.R.
26
541.201(a)
(The
phrase
directly
related
operations
refers
to
the
management
to
the
type
of
or
general
work
business
performed
by
the
exempt
based
on
the
type
of
work
performed
by
that
fact,
the
Labor
Departments
comments
to
29
C.F.R.
as
See 69 Fed.
supporting
541.3(b)(1)s
application
of
the
to
considered
employees
the
Investigators
whether
of
the
county
as
well.
administrative
probation
In
Bratt,
exemption
department
who
the
court
applied
to
conduct[ed]
Analogizing the
business
of
the
courts
or
advising
the
management
omitted).
probation
officers
information
in
provided
the
course
the
of
courts,
the
namely,
customers
providing
daily
business
Id.
officers
work
not
directly
relate
to
the
management
or
of
both
probation
officers
in
Bratt
and
the
report
their
results,
the
information
provided
by
the
Nothing
work
operational
duties
relate
management.
to
business
Compare
policy
Shockley,
or
997
overall
F.2d
at
28
time
accumulating
and
analyzing
data
and
making
752,
764
Lieutenants
(4th
Cir.
position
met
1998)
(holding
criteria
that
because
EMS
the
Training
Lieutenants
supervise[d]
delivery
of
training
and
tests[;]
and
respond[ed]
to
impromptu
questions
by
the
press,
ongoing
broadcast
investigations,
called
Crime
of
and
develop[ed]
the
Week).
an
ongoing
Rather,
the
information the Investigators provided was used in GEICOs dayto-day processing of their employers claims.
29
Regardless of
related
to
GEICOs
management
or
general
business
operations.
Further supporting the conclusion that conducting factual
investigations
does
not
constitute
exempt
work
is
29
C.F.R.
or
prevention
or
sanitation,
investigators
safety,
of
various
building
environmental
or
or
soils
types,
such
construction,
specialists
as
fire
health
and
or
similar
the
management
employer. 12
subsection
employees.
As
was
with
general
69
there
Fed.
is
business
541.3(b)(1),
motivated
See
541.3(b)(1),
or
by
no
the
concerns
Reg.
at
clear
operations
22,147.
addition
relating
But
indication
of
to
also
that
of
the
this
public
as
the
with
Labor
than
applying
generally
applicable
principles
to
the
12
30
Several
Labor
Department
letter
opinions
further
support
management
prominently,
or
general
2005
operations. 13
business
opinion
letter
considered
Most
whether
the
investigations
considered
for
U.S.
security clearances.
of
potential
Government
government
Secret
and
employees
Top
Secret
that
they
determinations,
were
the
called
Labor
upon
to
Department
make
concluded
credibility
that
their
Id. at *6.
13
ongoing,
day-to-day
investigative
services,
rather
than
Id.
inspectors,
employees
whose
requirements
for
investigators
duties
the
have
and
been
similar
found
administrative
employees,
not
exemption
to
meet
because
as
the
their
at
or
*7.
general
Thus,
investigators
business
the
Labor
activities,
operations
Department
while
of
the
employer.
determined
important,
do
not
that
the
directly
Id. at *6.
&
Hour
Div.,
Opinion
Letter,
WL
852783
(Apr.
17,
liquor
industry
involve[d]
the
day-to-day
production
investigations
of
various
types
of
employees
that
customer
substantial
concerning
businesses]
degree).
these
or
We
affect
see
interpretations,
them, as we must.
their
nothing
and
we
operations
plainly
to
erroneous
therefore
defer
to
primary
identify
as
duty
not
and
that
satisfying
33
of
the
the
many
jobs
directly
the
related
As the
34
duties.
the
regulation
identifies
the
typical
duties
of
an
exempt
for
see
exemption,
also
U.S.
including
Dept
of
the
Labor,
directly
Wage
&
related
Hour
Div.,
of
describes
the
are
Investigators,
typical
claims
adjuster
that
the
much
broader
than
those
certainly
and
they
include
some
duties
The
regulation
of
the
that
are
See 69 Fed.
16
business
include
as,
the
business,
such
for
planning,
negotiating,
work
of
example,
employees
servicing
advising
the
management,
company,
purchasing,
representing
the
the
GEICO
does
not
dispute
that
the
Investigators
adjuster
that
the
regulation
describes,
GEICO
See
36
work
remains
performed
involves
in
integral
the
partnership
making
adjusters]
to
with
findings
decisions
claims
the
that
to
pay
bear
or
adjusting
function,
[claims
adjusters],
directly
on
deny
the
claim).
is
and
[claims
But
this
541.201(a)
(The
phrase
directly
related
to
the
performed
by
the
employee.
(emphasis
added)).
Were
work
that
supported
the
claims-adjusting
function
business
operations.
But
in
fact
such
jobs
do
not
the
directly
Investigators
related
to
are
assisting,
management
whether
policies
or
their
general
work
is
business
And,
18
29 C.F.R. 541.201(b).
It is,
541.203(j).
Accordingly,
See 29 C.F.R.
although
the
issue
Willfulness
We disagree.
U.S.C.
limitations
251-62,
depends
the
upon
length
whether
19
of
the
the
FLSAs
violation
at
statute
issue
of
was
willful.
If it is not willful,
v. PNGI Charles Town Gaming, LLC, 630 F.3d 351, 357 (4th Cir.
2011) (Desmond II).
or
showed
reckless
disregard
for
the
matter
of
whether
its
omitted).
And,
willfulness.
See id.
willfully
generally
is
negligence
is
insufficient
to
establish
question
of
fact.
See
Martin
v.
The burden to
F.3d at 375.
Here, the question of whether the Investigators are exempt
was a close and complex one regarding two of the three elements
of the applicable test.
Nationwide
Mutual
essentially
identical
applied.
See
willfulness,
Insurance
to
Foster,
the
ours,
710
plaintiffs
F.3d
Company,
faced
concluded
that
at
point
with
the
644-50.
As
only
the
to
facts
exemption
evidence
memo
of
that
Investigators
exempt
status.
39
However,
Rutzebecks
with
that
decision
was
reckless.
In
fact,
the
one-
or
two-month
period
and
again
concluded
that
the
As was true
of
any
the
2004
process,
there
is
no
evidence
that
of
the
best
question,
attempts
and
we
to
conclude
resolve
that
this
their
difficult
decision
exemption
to
continue
incorrect
or
reckless.
Accordingly,
the
district
Regular Rate
to
calculate
the
compensation
overtime.
40
they
were
due
for
unpaid
lost
cases
overtime
in
29
which
is
the
established
employer
for
and
mistaken-FLSA-exemption
employee
had
mutual
hours
worked
each
workweek
and
the
salary
provided
compensation at a rate not less than the minimum wage for every
hour worked.
In such a case, a
rate
for
given
workweek.
Id.
(citing
Overnight
The
See
id. at 354-57.
In challenging the method the district court employed for
calculating damages, the plaintiffs simply maintain that there
was a genuine factual dispute regarding whether they agreed to
20
receive
straight-time
workweek.
pay
for
all
hours
worked
in
the
fixed
given
We disagree.
Importantly,
an
understanding
[that
weekly
the
employees
payment plan.
actions
that
he
or
she
understood
the
1281
n.21
(4th
Cir.
1996)).
For
many
years
without
objection, although the plaintiffs did not always work the same
number of hours in a day, they received fixed salaries that did
not fluctuate depending on the number of hours they worked.
this
basis,
determined
we
conclude
that
that
reasonable
Investigators
and
Investigators
were
GEICO
receiving
the
jury
came
district
could
to
court
only
straight-time
pay
correctly
find
understand
On
that
that
for
all
the
the
hours
GEICO
understanding
hired
them
with
the
that
they
would
be
working only 38.75 hours per week, that does not negate the fact
that
the
record
establishes
that,
over
time,
they
came
to
42
paid. 21
Liquidated Damages
We disagree.
may
refuse
to
award
liquidated
damages
if
the
29
U.S.C.
260)
(alteration
in
original).
This
21
had reasonable grounds for thinking the law was other than it
turned out to be.
either
element
is
sufficient
to
satisfy
the
Prior
to
November
24,
2009,
the
law
allowed
for
Effective
amount
allowed
of
unless
25
percent
the
of
employer
the
overtime
proves
underpayments
good
faith
basis
were
for
663(1).
The district court concluded that GEICO acted in good faith
by reviewing the classification issue multiple times and that,
44
issue was a very close one, and we conclude that the district
court was within its discretion in refusing to award liquidated
damages under either the FLSA or NYLL.
D.
Prejudgment Interest
of
liquidated
damages,
the
district
court
abused
its
that
GEICO
acted
Investigators as exempt.
Although
the
in
good
faith
in
treating
its
provide
for
We agree.
FLSA
does
not
explicitly
[p]rejudgment
interest
is
necessary,
in
the
interest
[on
backpay
award
under
the
FLSA]
as
offset
the
reduction
in
the
value
of
the
delayed
Cement Div., Natl Gypsum Co., 515 U.S. 189, 195 (1995) (The
45
essential
ensure
rationale
that
loss.).
an
for
injured
awarding
party
prejudgment
is
fully
interest
compensated
is
for
to
its
Dole, 899
F.2d at 1401; see Cline, 689 F.2d at 489 ([W]e have indicated
that the district court has discretion, based on the equities
involved, in awarding or denying interest in FLSA cases).
Nevertheless,
as
is
always
the
case
when
an
issue
is
City
of
Milwaukee,
515
U.S.
at
196
n.8.
Because
See id.
we
reverse
the
district
courts
denial
of
state
law
claims
come
46
before
federal
court
on
Mills v. River
Terminal Ry. Co., 276 F.3d 222, 228 (6th Cir. 2002).
Accord
Olcott v. Delaware Flood Co., 327 F.3d 1115, 1126 (10th Cir.
2003) (Where state law claims are before a federal court on
supplemental jurisdiction, state law governs the courts award
of prejudgment interest.); Mallis v. Bankers Trust Co., 717
F.2d 683, 692 n.13 (2d Cir. 1983) (Because the applicability of
state law depends on the nature of the issue before the federal
court
and
applies
not
to
on
the
questions
basis
of
for
its
prejudgment
jurisdiction,
interest
on
state
the
law
pendent
NYLL
wage
claim,
such
statutory
Practice
Law
right
and
was
Section
Rules,
which
as
this
one,
an
award
of
of
provides
New
that
Yorks
Civil
prejudgment
to,
or
possession
or
47
enjoyment
of,
property.
298
(E.D.N.Y.
2011)
(Section
5001
of
New
Yorks
Civil
Effective
April
governing
9,
2011,
New
York
also
amended
its
statutes
Accordingly,
court
did
not
with
regard
have
to
discretion
the
to
NYLL
claims,
decline
to
the
award
prejudgment interest.
IV.
In sum, for the foregoing reasons, we reverse the district
courts decision denying prejudgment interest under the FLSA and
NYLL and remand so that the district court may award prejudgment
interest.
We otherwise affirm.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED
22