Frank Foster v. Nationwide Mutual Insurance Co.
710 F.3d 640
| 6th Cir. | 2013Background
- Nationwide runs a Special Investigation Unit (SIU) to detect fraud and support claims handling; SIs cannot adjust claims due to CA licensing requirements.
- SIs are organized under regional directors and supervisees; primary duty is investigating suspicious claims to resolve fraud indicators.
- The FLSA administrative exemption requires (i) salary threshold, (ii) work related to management or general business operations, and (iii) discretion and independent judgment on matters of significance.
- District court held first two elements met; third element disputed but bench trial found SIs exercise discretion and judgment in resolving fraud indicators and in referrals to law enforcement/ NICB.
- This court affirms the district court, holds California and NY law analogs align with FLSA results, and rejects district court reliance on certain DOL letters as controlling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SIs satisfy the third element of the admin exemption | Foster: SIs lack discretion/judgment | Nationwide: SIs exercise discretion in resolving fraud indicators | Yes; SIs exercise discretion and matters of significance. |
| Whether SIs’ work is directly related to general business operations | SIs perform production or investigative functions not related to operations | SIs’ investigations support claims handling and servicing the business | Yes; investigations are directly related to servicing Nationwide’s business. |
| Whether California law exemption is satisfied | California standard is stricter than FLSA | Nationwide met California requirements similarly to FLSA | Satisfied under California law as well. |
| Whether 2005 DOL opinion letters control the outcome | Letters show investigators are non-exempt | Letters are not controlling here; district court weighed facts | Not controlling; factual record supports exemption. |
Key Cases Cited
- Renfro v. Indiana Mich. Power Co. (Renfro II), 497 F.3d 573 (6th Cir. 2007) (admin exemption elements must be proved by a preponderance; discretion matters)
- Renfro v. Indiana Mich. Power Co. (Renfro I), 370 F.3d 512 (6th Cir. 2004) (administrative vs production duties framework)
- Schaefer v. Indiana Mich. Power Co., 358 F.3d 394 (6th Cir. 2004) (administrative exemption and production dichotomy)
- Robinson-Smith v. Gov’t Emps. Ins. Co., 590 F.3d 886 (D.C. Cir. 2010) (test for discretion in matters of significance)
- Roe-Midgett v. CC Servs., Inc., 512 F.3d 865 (7th Cir. 2008) (claims adjuster duties and admin exemption)
- Henry v. Quicken Loans, 698 F.3d 897 (6th Cir. 2012) (cannot decide exemption issue as a matter of law when material fact questions exist)