Earlier, I noted on this blog that JP Morgan Chase had asked a New York federal judge on July 14, 2011, to grant final approval to a $42 million settlement resolving a class action challenging the bank’s classification of its residential loan underwriters as exempt from overtime pay requirements. On October 12, 2011, the court granted the request and gave final approval to the $42 million settlement.
The case had a long history, being filed in 2001. The District Court granted summary judgment in JP Morgan’s favor. The Second Circuit reversed finding that JP Morgan’s residential loan underwriters were not exempt from overtime, because their jobs were more like non-exempt “production” job than like exempt “administrative” jobs. The Second Circuit found it significant that the residential loan underwriters had little discretion and basically had to follow written guidelines for the approval of loans. Even more telling, the residential loan underwriters were not reviewed based on the quality of the loans they approved, but instead, were reviewed based on the number of loans they approved. In other words, the job was more like an assembly line.
The judge found that the settlement was reasonable given the significant risks both sides faced going forward. Objectors had claimed that the total potential exposure for JP Morgan Chase was $169 million, but the judge found that the numbers submitted by the plaintiffs and defendants showing exposure of $45 million were based on reasonable assumptions. Further, the judge found that the settlement fell within the range of reasonableness given the realistic, rather than the theoretical, potential recovery.
The case is Davis et al. v. JPMorgan Chase & Co., case number 6:01-cv-06492, in the U.S. District Court for the Western District of New York.