Judge backs recused judge's decision to OK loan officers' wage class action vs American Bank & Trust

By Cook County Record | Sep 10, 2018

CHICAGO – A federal judge has confirmed another judge's decision earlier this spring to refuse to end a class action brought by a group of bank loan officers, who accused their employer, American Bank and Trust, of shorting them wages and commissions.

On Aug. 24, U.S. District Judge Andrea Wood denied the bank's request to reconsider the decision of Wood's colleague, Judge John Z. Lee, who had recused himself after he had granted the plaintiffs' request to certify their collective action against the bank. Lee had granted the motion for class certification on March 31, 2017, but about six weeks later, on May 11, 2017, Judge Lee recused himself, saying "one of the parties is represented by a law firm (he) was associated with during the past five years."

Plaintiffs Marc Kramer, Kiril Trajcevski and Matt Nyman had filed suit in 2011 against American Bank and Trust, alleging they and others who had worked as mortgage loan officers at the bank were owed wages and commissions which the bank allegedly failed to pay, allegedly in violation of the federal Fair Labor Standards Act and the Illinois Minimum Wage Law. 

According to the court documents, the bank classified the loan officers as “sales employees,” which the bank claimed allowed the employes to be paid "on a commission-only basis" before January 2011.

After that date, however, the bank "began tracking hours worked and started paying loan officers hourly wages and overtime wages," asking its employees to "report only 40 hours per week, regardless of whether the loan officers worked additional hours," according to the factual background in Judge Wood's opinion.

The employment agreement, cited in the ruling, "represented that they would be paid monthly commissions as a percentage of 'revenue generated' from the loans originated by the loan officer."

However, the loan officers also asserted the bank would "skim" a portion of what they alleged was their pay, under a "company-wide policy of setting aside for itself a percentage of the revenue that was generated when a mortgage loan was sold in the secondary mortgage market, i.e., the 'secondary gain,' and considered that gain as 'the Bank’s profit margin.'"

The loan officers' commissions were thus calculated by the bank as "a percentage of the total revenue generated from his or her mortgage loans less the secondary gain,' the ruling stated.

Following Judge Lee's recusal, American Bank responded with the request for reconsideration, and again asserted its arguments that the lawsuit should not be allowed to proceed as a class action. The bank asked Judge Wood to undo Judge Lee's ruling.

However, Judge Wood backed Judge Lee's decision, saying she agreed with Judge Lee's conclusions in certifying the class action and allowing the loan officers to continue with their lawsuit.

"...This Court concludes that the issues covered by the March 31, 2017 Memorandum Opinion and Order were correctly decided and those rulings should stand," Judge Wood wrote.

American Bank and Trust is represented by attorneys with the firms of Heninger and Heninger P.C., of Davenport, Iowa, and Pappas O'Connor P.C., of Rock Island.

Plaintiffs are represented by attorneys with the firms of Freeborn & Peters, of Chicago; and Offit Kurman P.A., of Baltimore, Md.

U.S. District Court for the Northern District of Illinois Case number 1:11-cv-08758

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Freeborn & Peters Offit Kurman, Attorneys At Law Pappas O'Connor U.S. District Court for the Northern District of Illinois

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