Authored by Barry Miller

Overtime class actions are now at epidemic proportions in the mortgage lending industry.  Dozens of lenders and brokers have been sued since the Department of Labor issued an Administrator’s Interpretation in March 2010 reversing the Department’s prior guidance regarding the application of the FLSA’s administrative exemption to mortgage loan originators (MLOs).  However, a number of MLO overtime lawsuits were filed even before the Department of Labor’s reversal.  One of the first and most highly publicized of such cases is Henry v. Quicken Loans, which was filed in the U.S. District Court for the Eastern District of Michigan in May 2004. 

The trial of the Quicken Loans case began in Detroit on February 8, 2011.  Following four weeks of testimony, the case will be turned over to the jury to decide after closing arguments on Monday, March 14.  The stakes are high, and the jury faces a daunting task.  In addition to very technical questions of liability and complex questions regarding damages, the jury will decide whether the testimony presented at trial can serve as representative proof that will determine the exempt status of loan officers who did not testify in the case.

Though Quicken asserted other defenses during the pre-trial stage of the case, at trail the company has relied exclusively on the administrative exemption.  Interestingly, the proposed jury instructions filed in the case suggest that the jury will consider the case in a framework that does not account for the DOL Administrator’s Interpretation on MLOs.  This appears to result primarily from an amicus  brief that the DOL filed in the case in December 2010, in which the Department acknowledged that it would be unfair to apply its newly adopted position as described in the Interpretation to events that occurred before March 2010.   (See Seyfarth Shaw’s January 13, 2011 posting.)

Stakeholders will  view the verdict in the Quicken case–however the jury decides–as a potential bellwether for the application of the administrative exemption in the mortgage lending industry.  Based on the hard fought nature of the litigation, the high stakes, and the parties’ briefing of numerous significant legal issues leading up to and through the trial, an appeal also appears very likely, whichever side wins the trial.