In re Farmers Ins. Exchange, Claims Represent.
| Decision Date | 26 October 2006 |
| Docket Number | No. 05-35080.,No. 05-35509.,No. 05-35082.,No. 05-35145.,No. 05-35146.,No. 05-35501.,05-35080.,05-35082.,05-35145.,05-35146.,05-35501.,05-35509. |
| Citation | 481 F.3d 1119 |
| Parties | In re FARMERS INSURANCE EXCHANGE, CLAIMS REPRESENTATIVES' OVERTIME PAY LITIGATION, Dave Miller, on behalf of himself and the class members in MDL Case No. 1439, Plaintiffs-Appellants, v. Farmers Insurance Exchange, Defendant-Appellee, and Farmers Group, Inc.; Plan Administrator of the Farmers Group, Inc. Profit Sharing Savings Plan Trust; Plan Administrator of the Farmers Group, Inc. Employees' Pension Plan, Defendants. In re Farmers Insurance Exchange, Claims Representatives' Overtime Pay Litigation, Dave Miller, on behalf of himself and the class members in MDL Case No. 1439, Plaintiffs-Appellees, v. Farmers Insurance Exchange, Defendant-Appellant, and Farmers Group, Inc.; Plan Administrator of the Farmers Group, Inc. Profit Sharing Savings Plan Trust; Plan Administrator of the Farmers Group, Inc. Employees' Pension Plan, Defendants. In re Farmers Insurance Exchange, Claims Representatives' Overtime Pay Litigation, Jesse Corralez, on behalf of himself and the class members in MDL Case No. 1439, Plaintiffs-Appellants, v. Farmers Insurance Exchange, Defendant-Appellee, and Farmers Group, Inc.; Plan Administrator of the Farmers Group, Inc. Profit Sharing Savings Plan Trust; Plan Administrator of the Farmers Group, Inc. Employees' Pension Plan, Defendants. In re Farmers Insurance Exchange, Claims Representatives' Overtime Pay Litigation, Jesse Corralez, on behalf of himself and the class members in MDL Case No. 1439, Plaintiffs-Appellees, v. Farmers Insurance Exchange, Defendant-Appellant, and Farmers Group, Inc.; Plan Administrator of the Farmers Group, Inc. Profit Sharing Savings Plan Trust; Plan Administrator of the Farmers Group, Inc. Employees' Pension Plan, Defendants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Steven G. Zieff, Kenneth J. Sugarman, Rudy, Exelrod & Zieff, LLP, San Francisco, CA; James M. Finberg, Eve H. Cervantez, Lieff Cabraser Heimann & Bernstein, LLP, San Francisco, CA; and Michael Rubin, Peder J.V. Thoreen, Altshuler, Berzon, Nussbaum, Rubin & Demain, San Francisco, CA, for plaintiffs Jesse Corralez, et al., and David Miller, et al.
Theodore J. Boutrous, Jr., Deborah J. Clarke, Elisabeth C. Watson, Gibson, Dunn & Crutcher LLP, Los Angeles, CA, and Barnes H. Ellis, James N. Westwood, Stoel Rives LLP, Portland, OR, for defendants Farmers Insurance Exchange, et al.
Appeal from the United States District Court for the District of Oregon; Robert E. Jones, District Judge, Presiding. D.C. No. CV-02-01439-JO.
Before BARRY G. SILVERMAN and RONALD M. GOULD, Circuit Judges, and JOHN S. RHOADES, SR.,* District Judge.
ORDER AMENDING OPINION AND AMENDED OPINION
ORDERThe Opinion filed October 26, 2006, slip op. 17921, and appearing at 466 F.3d 853 (9th Cir.2006), is amended as follows:
1. At slip op. 17934, footnote 4, second paragraph, lines 7 & 9, insert "under the FLSA" after "the claims adjusters in this case are exempt" and "under the statute" after "liquidated damages."
2. At slip op. 17939, replace citation at the end of the paragraph labeled headnote [6] with "Cheatham v. Allstate Ins. Co., 465 F.3d 578, 586 (5th Cir.2006) (per curiam)."
3. At slip op. 17941, line 3, delete "(Emphasis added.)" at end of sentence and replace with the following:
(Quoting DOL Wage & Hour Div. Op. Ltr., at 3 (Nov. 19, 2002) ().)
4. At slip op. 17941, after the first sentence of the first full paragraph labeled headnote [8], insert the following citation:
See Cheatham, 465 F.3d at 585 ().
5. At slip op. 17941-42, delete last two sentences of full paragraph labeled as headnote [8] and replace with:
For those reasons, we disagree with the district court's legal conclusion, quoting the language of the regulations, that an automobile damage adjuster's primary duties "require the use of skill in applying techniques, procedures and specific standards, not the use of discretion and independent judgment." (Quoting 29 C.F.R. § 541.207(b) (2004).)
6. At slip op. 17942, delete first full paragraph that begins "Plaintiffs argue that" and insert the following two new paragraphs:
Plaintiffs argue that § 541.203 provides "illustrative examples" of how some adjusters may meet the duties test, and that we have applied the regulation to "an overly-simplified version of the facts of this case." They instead characterize the district court's findings as establishing that they satisfy neither prong of the duties test — first, plaintiffs argue, because they deliver FIE's "product" (i.e., insurance coverage) to its customers, they are merely engaged in the "day-to-day carrying out of the business' affairs, rather than running the business itself," Bratt, 912 F.2d at 1070 (), and second, they argue that decisions delegated to them are limited to the "routine and unimportant." The district court's findings support no such conclusion.
An employee "whose responsibility it is to execute or carry ... out" policy may satisfy the "directly related" prong if his work is otherwise of "substantial importance" to the management or operation of the business. 29 C.F.R. § 541.205(c) (2004). The regulations also require that the employee's exercise of discretion and independent judgment be "real and substantial," § 541.207(d)(1) (2004), or as plaintiffs phrase it, "comprise[ ] a substantial element of [his primary] duties." That is, the employee must exercise discretion and independent judgment in "matters of significance." § 541.200(a)(3).
7. Slip op. 17942, delete first two sentences of paragraph that begins "In addition to finding" and replace with the following two sentences:
In addition to finding that FIE could be subject to state fines if reserves are set too low, the district court found that an adjuster's coverage decisions — which, as we have pointed out, are typically made without supervisor involvement — "are important to FIE's reputation with the insurance-buying public," and that an adjuster "represent[s] FIE to policyholders, claimants, and others involved in the claim's resolution (e.g., witnesses, vendors, body shops, outside experts, police, fire personnel, attorneys, claims representatives from other companies, judges, arbitrators)." See § 541.205(b) (2004) ().
8. Slip op. 17942, paragraph that begins "In addition to finding," delete last sentence that begins "In Cheatham, the Fifth Circuit concluded" and replace with the following:
In Cheatham, the Fifth Circuit concluded that the duties of the adjusters were directly related to Allstate's management policies or general business operations because they "advised the management, represented All-state, and negotiated on Allstate's behalf," all of which "required [their] exercise of discretion and independent judgment." Cheatham, 465 F.3d at 585.
9. Slip op. 17943, first full paragraph, lines 4-5: delete "according to the district court" and insert the following citation at the end of that sentence: "DOL Wage & Hour Div. Op. Ltr., at 3 (Nov. 19, 2002)."
10. Slip op. 17943, first full paragraph, delete last sentence and its accompanying citation and replace with the following:
What matters is that, because they represent FIE to the public through their handling of claims and directly impact FIE's customer base, the adjusters' work "affects business operations to a substantial degree, even though their assignments are tasks related to the operation of a particular segment of the business." § 541.202(b).
11. Slip op. 17944, lines 6-7, insert "under the FLSA" after "multi-line adjusters are exempt."
12. Slip op. 17944-45, paragraph labeled headnote [11], delete "Nor is there any indication that the DOL intended to carve out exceptions for certain types of adjusters because, in its view, they exercise less discretion and independent judgment compared to other types of adjusters."
13. Slip op. 17945, delete second sentence of paragraph labeled as headnote [11] and replace with:
Moreover, § 541.203 says that adjusters are exempt if they, like the adjusters in this case, determine coverage and liability, prepare estimates and negotiate settlements.
14. Slip op. 17947, paragraph labeled headnote [14], delete the following:
Plaintiffs do not even mention the overtime laws in Illinois, New Mexico or Washington, so the issue of whether claims adjusters from those states could still recover under state law is waived. See Fields v. Palmdale Sch. Dist., 427 F.3d 1197, 1203 n. 6 (9th Cir.2005) ().
15. Slip op. 17947, paragraph labeled headnote [14], lines 6-9, delete "As to Colorado, Minnesota and Oregon law" so that sentence begins with "Plaintiffs assert" and insert "under state law" after "for the administrative exemption."
16. Slip op. 17947, paragraph labeled headnote [14], lines 11-12, replace "in those three states" with "in Colorado, Minnesota and Oregon."
17. Slip op. 17948, paragraph labeled headnote [15], last line, insert "as well as Illinois, New...
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