In re Wells Fargo Home Mortgage Overtime Pay Litigation

268 F.R.D. 604, 2010 U.S. Dist. LEXIS 3132, 2010 WL 174329
CourtDistrict Court, N.D. California
DecidedJanuary 13, 2010
DocketNo. C 06-01770 MHP
StatusPublished
Cited by18 cases

This text of 268 F.R.D. 604 (In re Wells Fargo Home Mortgage Overtime Pay Litigation) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Wells Fargo Home Mortgage Overtime Pay Litigation, 268 F.R.D. 604, 2010 U.S. Dist. LEXIS 3132, 2010 WL 174329 (N.D. Cal. 2010).

Opinion

MEMORANDUM & ORDER

Re: Plaintiffs Renewed Motion for Class Certification

MARILYN HALL PATEL, District Judge.

This multidistrict litigation arises out of three putative collective actions and one putative class action by current and former Home Mortgage Consultants (“HMCs”), against Wells Fargo Home Mortgage (“defendant” or “Wells Fargo”), the HMCs’ current or former employer. The HMCs seek to recover overtime pay under various federal and state laws. On October 18, 2007, this court granted a motion for class certification filed by James Mevorah (“Mevorah”), the proposed class representative of a class of HMCs who worked for Wells Fargo in California. In re Wells Fargo Home Mortgage Overtime Pay Litig., 06-1770 MHP, 2007 WL 3045995 (N.D.Cal. Oct. 18, 2007). Wells Fargo appealed that order, and on July 7, 2009, the Ninth Circuit reversed, mandating that this court conduct a “a new certification analysis consistent” with its opinion. In re Wells Fargo Home Mortgage Overtime Pay Litig., 571 F.3d 953, 959 (9th Cir.2009). At an August 10, 2009, status conference, the court ordered that the parties rebrief the motion for class certification in light of the Ninth Circuit’s opinion. Now before the court is the rebriefing, which plaintiff has labeled as a “Renewed Motion for Class Certification.” Having considered the arguments and submissions of the parties and for the reasons set forth below, the court enters the following memorandum and order.

BACKGROUND

The court discussed the employment conditions of Wells Fargo’s California HMCs in great detail in its order initially granting plaintiffs motion for class certification. As none of the material facts have changed, the court provides essentially the same factual summary as background to the following discussion.

I. Wells Fargo’s Practices Related to HMCs

HMCs are employees of Wells Fargo whose primary function is to market and sell residential mortgages, for which they are paid a commission based on their sales. Since January 2005, HMCs have also been paid a minimum, non-recoverable draw against commissions. Defendant asserts that there are currently between 1,000 and 1,500 HMCs in California, plus thousands more nationwide. Since 2001, there have been approximately 5,000 California HMCs and approximately 20,000 nationwide. See Docket No. 51 (Blackwell Dec.) ¶ 3. During the relevant period, California HMCs were paid an [607]*607average annual compensation of $149,000, ■with some HMCs receiving more than $500,000 or $1 million. See Docket No. 15 (Cahalan Dec.) ¶2. Mevorah acknowledged that a “fairly good sized portion of the class exceeded $100,000 in annual commissions,” but claimed that these commissions arose after working “very long hours” in a highly competitive business. See Docket No. 39 (Motion to Certify Class (“Mot.”)) at 3. There are no reliable time records of the actual hours worked by HMCs during the class period. See Case No. C-05-02722, Docket No. 43 (Mevorah Dec.) at ¶ 9. Wells Fargo claims that HMCs are entrepreneur-type employees who have a large degree of autonomy in deciding how to shape their individual business practices. Blackwell Dee. ¶4. Importantly, Wells Fargo classifies all HMCs as exempt from both federal and state overtime laws.

HMCs may specialize in a particular type of mortgage they sell, with each specialization entailing a distinct set of strategies and activities. Among the specializations identified by Wells Fargo are “prime HMCs,” who work with borrowers qualifying for the best interest rates, “sub-prime HMCs,” who work with borrowers with impaired credit, “reverse mortgage HMCs,” who work primarily with seniors, “renovation HMCs” specializing in mortgages to finance home improvement, “builder HMCs” focusing on particular housing developments and “emerging market HMCs” who develop relationships with historically underserved communities. Id. ¶¶ 6-9.

In addition to these varied specializations, Wells Fargo identifies a host of factors which, according to Wells Fargo, create wide variations in compensation, total hours worked, and the amount of time that HMCs spend in and out of the office or consulting with clients. Firstly, HMCs’ work-style preferences and marketing strategies lead to different approaches and time commitments based on different target customers and referrers. Id. ¶ 10. Secondly, because Wells Fargo provides training only and does not supervise HMCs, an HMC may set his or her own compensation goal and work as little or as much as desired to attain that goal. Id. ¶¶ 11-12. Thirdly, HMCs allocate work time differently as they gain experience and build skills and client bases. Id. ¶ 13. Fourth, HMCs operate in a variety of geographic locations within California, including densely-populated and sparsely-populated cities, affluent suburbs and rural communities, with demographic and economic variations creating different experiences among HMCs. Id. ¶ 14. Finally, market forces such as fluctuations in interest rates and consumer preferences based on the time of year (with fewer people buying property during the Fall and Winter months) create differences among HMC work. Id. ¶ 15.

II. Procedural Background

This action was initially filed by Mevorah on February 10, 2005, in the California Superior Court for the County of San Francisco, alleging eight causes of action related to defendant’s classification of HMCs as exempt employees: (1) violation of California Business and Professions Code section 17200 (“section 17200”) for failure to pay overtime as required by the Fair Labor Standards Act (“FLSA”); (2) violation of section 17200 for violation of California Wage Order 4-2001; (3 & 4) two causes of action for violation of California Labor Code section 1194 for failure to pay overtime; (5) violation of section 17200 for failure to pay overtime; (6) violation of California Labor Code sections 201 and 202 for failure to pay overtime upon termination; (7) violation of California Labor Code section 226.7 for failure to provide required meal and rest breaks; and (8) declaratory relief. Defendant removed the action to this court on March 22, 2005. Mevorah’s action was subsequently related to the Multidistrict Litigation captioned as In re Wells Fargo Home Mortgage Overtime Pay Litigation, No. MDL 06-1770 MHP.

a. The October 18, 2007, order granting the motion for class certification

Mevorah moved the court to certify a class defined as “All persons who were employed by Wells Fargo Home Mortgage in the State of California as a Home Mortgage Consultant after February 10, 2001.” As is alluded to above, this court granted that motion and certified the class action. In the order granting the motion, the court devoted the [608]*608bulk of its discussion to the predominance and superiority requirements of Federal Rule of Civil Procedure 23(b) (3). Rule 23(b)(3) mandates that a class action should only be certified if a court “finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P.

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Bluebook (online)
268 F.R.D. 604, 2010 U.S. Dist. LEXIS 3132, 2010 WL 174329, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-wells-fargo-home-mortgage-overtime-pay-litigation-cand-2010.