Reich v. Chicago Title Ins. Co., 93-2309-KHV.

• Decision Date: 19 May 1994
• Docket Number: No. 93-2309-KHV.,93-2309-KHV.
• Parties: Robert B. REICH, Secretary of Labor, United States Department of Labor, Plaintiff, v. CHICAGO TITLE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Kansas

853 F. Supp. 1325

Robert B. REICH, Secretary of Labor, United States Department of Labor, Plaintiff, v. CHICAGO TITLE INSURANCE COMPANY, Defendant.

No. 93-2309-KHV.

United States District Court, D. Kansas.

May 19, 1994.

Malinda B. Schoeb, Mary D. Wright, U.S. Dept. of Labor, Office of the Solicitor, Kansas City, KS, Jamison Poindexter Milford, Michael A. Stabler, U.S. Dept. of Labor, Office of the Solicitor, Kansas City, MO, for plaintiff.

Frank W. Lipsman, Eugene F. DeShazo, Smith, Gill, Fisher & Butts, Kansas City, MO, Benton J. Mathis, Jr., Peter H. Schmidt, II, Drew, Eckl & Farnham, Atlanta, GA, for defendant.

MEMORANDUM AND ORDER

VRATIL, District Judge.

This matter comes before the Court on Defendant's Motion for Summary Judgment (Doc. # 92), Plaintiff's Motion for Partial Summary Judgment (Doc. # 98), and Plaintiff's Motion to Strike Affidavits (Doc. # 114). This case involves the overtime requirements and exemptions of the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 207(a), 213(a)(1). At issue in the cross-motions for summary judgment are whether Chicago Title's branch managers are exempt "executive" employees and whether Chicago Title's escrow closers are exempt "administrative" or "outside sales" employees. The Department of Labor ("DOL") directs its motion to strike at certain affidavits submitted in support of Chicago Title's motion for summary judgment.

Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The Court considers all evidence and reasonable inferences therefrom in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356-57, 89 L.Ed.2d 538 (1986). The nonmoving party, however, "may not rest on its pleadings but must set forth specific facts showing that there is a genuine issue for trial as to those dispositive matters for which it carries the burden of proof." Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990). To this end, the Court must identify — but not resolve — facts which are both material and genuinely in dispute and which might compel or preclude the entry of judgment as a matter of law.

In this case, the material facts center around the duties of Chicago Title's escrow closers. Despite the inability of the parties to agree on the characterization of those duties, the Court finds that escrow closers' duties about which the parties agree direct the conclusion that the escrow closers are not exempt from the FLSA's overtime requirements. In that regard, the Court identifies no genuine dispute as to any material fact.

I. Background

Chicago Title Insurance Company is a corporation engaged in the business of insuring title for real property. Chicago Title's main office for the Kansas City metropolitan area is located in downtown Kansas City and houses, among other things, Chicago Title's commercial escrow closing operations. In addition, Chicago Title has branch offices located throughout the metropolitan area. Among those, Chicago Title operates fourteen branch residential closing offices in the Kansas City metropolitan area. Six of those offices are located in Missouri; the other seven offices are located in Kansas. Three types of employees may be found in the branch residential closing offices: a branch manager-escrow; escrow closers; and escrow assistants. The escrow closers report directly to their respective branch managers, who in turn report to the manager in charge of all Kansas City operations, Kathryn Sartin.

Chicago Title's first contact with a customer generally is through its residential or commercial closing departments. An escrow closer is responsible for managing an escrow file from the date of deposit until closing. Residential escrow closers perform some or all of a variety of tasks:

Escrow closers have direct contact with the Company's customers and forward the requests for title insurance from the customers. The closer quotes the fee for title insurance. The escrow closer also responds to pertinent questions which may arise through the closing transaction. The closer prepares the buyer's and seller's closing statements and insures that all closing documents are properly prepared. The closer sets up a closing appointment, and follows up with the customers to insure that the transaction is progressing to completion. The closer supervises the execution of the closing documents and prepares the closing statements. The closer receives and receipts money from the buyer and examines the closing file to insure that the lending agent's requirements have been satisfied. The closer orders the loan check, updates the closing file and determines the appropriate tax payoff. The closer receives and disburses the loan funds from the lending agent. The closer's duties include maintaining the file for release of liens and, if a payoff has been ordered, reviewing the file to insure that all money has been disbursed and taxes have been paid. Upon closure of the file, the closer disburses all funds to seller, lender, realtor and other appropriate parties. Finally, the closer provides the recorded deed and title policy to the buyer and follows-up with the Company's customer. As part of the above process, the closer also conducts a closing conference in almost all instances.

The closer sends out recording packages, returns loan packages to the lenders, orders payoffs, orders termite inspections, checks on home association dues, types contracts, returns recorded documents to lenders, to sellers and to buyers, and sends other documents, such as releases, to be recorded.

Pl.'s Br.Supp.Mot.Partial Summ.J., at 4-5; see also Pretrial Order (Doc. # 89), at 9-11. Commercial escrow closers perform duties similar to residential escrow closers, but in the context of a commercial real estate transaction.

In handling escrow files, Chicago Title escrow closers have access to various guidelines and manuals, including (1) the Settlement Services Guide; (2) standard sample files and legal forms; (3) the Closer Training Manual; and (4) an Underwriting Guide.¹ A typical closer in the Kansas City area handles approximately 700 closings per year. At the branch residential closing offices, the branch manager also oversees the daily operations of that office. Escrow assistants perform specific tasks assigned by an escrow closer, such as taking orders, typing communications, helping with phone calls, setting up appointments, and preparing checks.

Chicago Title's escrow closers are paid on a salary basis, with the salaries of residential escrow closers typically ranging from $20,000 to $30,000 per year and the salaries of commercial escrow closers typically ranging from $30,000 to $37,000 per year. In addition, the escrow closers are eligible for an incentive bonus if they accumulate "credits" in excess of those set forth as the threshold for participation pursuant to a written incentive plan. Depending on salary level and experience, an escrow closer's participation threshold might increase if he or she utilizes the services of a processor, and earned credits are deducted when certain problems arise with respect to that closing file, such as the filing of a claim or an overdraft. Over the course of a year, some residential closers have earned incentive payments in excess of $10,000.

The Department of Labor ("DOL") originally sought FLSA redress on behalf of all of Chicago Title's branch managers and escrow closers located in the Kansas City area. Chicago Title moves for summary judgment with respect to the FLSA status of both categories of employees, contending that its escrow closers are exempt "administrative" or "outside sales" employees and that its branch managers are exempt "executive" employees. In its motion for partial summary judgment, the DOL addresses only the FLSA status of the escrow closers, contending that the undisputed facts establish that Chicago Title's escrow closers do not qualify for the administrative employee exemption.

II. Administrative Exemption

The Fair Labor Standards Act ("FLSA") sets forth the general requirement that workers receive overtime compensation for hours worked in excess of forty per week. 29 U.S.C. § 207. Those overtime requirements, however, do not apply to persons employed in a bona fide administrative capacity. Id. § 213(a)(1). The employer asserting an FLSA exemption bears the burden of proof. See Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190, 206, 86 S.Ct. 737, 747, 15 L.Ed.2d 694 (1966). Exemptions to the FLSA are to be narrowly construed, Reich v. Wyoming, 993 F.2d 739, 741 (10th Cir.1993), with their application limited to employees who are "plainly and unmistakably within their terms and spirit." Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 456, 4 L.Ed.2d 393 (1960); see also Martin v. Cooper Elec. Supply Co., 940 F.2d 896, 900 (3d Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 1473, 117 L.Ed.2d 617 (1992).²

The regulations establish two tests for determining whether an employee falls within the administrative exemption: the long test and the short test. Because the employees in question earn in excess of $250 per week, the short test governs this case.³ Under the short test, an employee is deemed exempt if his "primary duty consists of ... the performance of office or nonmanual work directly related to management policies or general business operations of the employer or the employer's customers ... where the performance of such primary duty includes work requiring the exercise of discretion and independent judgment." 29 C.F.R. § 541.214(a) (1993); see also id. § 541.2(e)(2).

The interpretive regulations provide as...