Cook County Record

Tuesday, October 15, 2019

Judge OKs preliminary deal to end lawsuit vs American Bank & Trust over loan officers pay


By Scott Holland | Sep 20, 2019

CHICAGO – A federal judge has granted preliminary approval of a $5 million settlement involving American Bank & Trust and loan officers who sued over disputed wages.

Plaintiffs Marc Kramer, Kiril Trajcevski and Matt Nyman sued in 2011, alleging the bank violated the federal Fair Labor Standards Act and the Illinois Minimum Wage Law by shorting wages and commissions owed to mortgage loan officers. U.S. District Judge John Z. Lee certified the class action in March 2017 and recused himself six weeks later, saying, “One of the parties is represented by a law firm I was associated with during the past five years.”

U.S. District Judge Andrea Wood took over the case and allowed the complaint to continue. On Sept. 9, she issued an order giving the settlement preliminary approval. The order names as class counsel the plaintiffs’ lawyers, attorneys with the firms of Freeborn & Peters, of Chicago, and Offit Kurman P.A. of Baltimore, and lists the three named plaintiffs as class representatives.

The terms of the settlement, detailed in a July 29 memorandum, call for the class members to recover 80 percent of the alleged damages with their attorneys to get the remaining $2 million as a fee, as well as $299,193 in reimbursement for out-of-pocket costs and expenses. Kramer, Trajcevski and Nyman would get $12,500 each as incentive awards.

The men alleged the bank classified them as “sales employees” paid only on commission until January 2011. That’s when the bank allegedly started paying hourly and overtime wages, but asked them to “report only 40 hours per week, regardless of whether the loan officers worked additional hours,” according to the factual background in a September 2018 Wood opinion.

While the agreement called for the loan officers to keep getting monthly commissions as a percentage of the revenue their loans generated, the men alleged the bank told them it would skim their earnings 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, or the ‘secondary gain,’ and considered that gain as ‘the Bank’s profit margin.’”

The plaintiffs hired an economic expert to calculate damages owed to class members based on information from 23 bank workers who opted into the litigation. In asking for the settlement, the plaintiffs said the damages were calculated “aggressively to maximize their recovery” leading to a prorated reduction to 80 percent in the agreement.

According to the July 29 memorandum, the lawyers for the plaintiffs said the bank tried to have them disqualified from the case. They said they took 30 depositions and exchanged 25,000 documents with defense attorneys, “invested over $2 million in billable fees, accumulated over eight years” and are seeking less than their entitled amount under a class contingency agreement. They also noted only one person opted out of the class, “reflecting the fact that the contingency sought was clearly not deemed unreasonable or unacceptable by the class.”

In arguing for the settlement, class attorneys said the plaintiffs would benefit by avoiding the uncertainties of proceeding to trial, but also noted winning a large judgment could force the bank into closure, meaning the workers wouldn’t be able to recover any damages whatsoever.

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.

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Organizations in this Story

American Bank & Trust Co. FREEBORN & PETERS Heninger and Heninger P.C. OFFIT KURMAN Pappas O'Connor U.S. District Court for the Northern District of Illinois, Eastern Division

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