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Media Coverage

Client decided to become a wage-and-hour role model

13 June 2011
National Law Journal

Hanging prominently on Robert Davis' office wall is a copy of the court judgment that crowned his seven-year defense of a wage-and-hour suit against Quicken Loans Inc.

"The Plaintiffs take nothing," it reads.

Davis, a former attorney for the U.S. Department of Labor, now a partner at Mayer Brown, has handed more than 100 federal and state wage-and-hour cases. But the Quicken case, which centered on whether mortgage-loan officers were entitled to millions of dollars in overtime, was the only one that went to trial. The company faced millions in damages but walked away clear. "They wanted to vindicate their name," said Jeffrey Morgan-roth of Morganroth & Morganroth in Birmingham, Mich., Davis' co-counsel.

Quicken Loans was one of many mortgage lenders to face lawsuits for allegedly not paying overtime to their loan officers. The workers contended that their jobs were almost entirely sales and that, as a result, they are entitled to overtime under the Fair Labor Standards Act. Defendants, including Quicken Loans, said they fell under an administrative exemption, since they are providing analysis and other functions typical of a financial professional.

Most companies settle these suits. Nichols Kaster, the Minneapolis firm representing the plaintiffs, boasts on its Web site that it has recovered more than $100 million in similar lawsuits during the past decade; its largest settlement recovered $38 million from Washington Mutual Inc. in 2009.

Quicken refused to back down, instead adopting what Nichols Kaster founder Donald Nichols called a "scorched earth defense." Company founder Dan Gilbert was committed "to defending his company on the merits," said Davis, who Quicken hired days after the complaint was filed. "This is a company that really thought it was doing things right," Davis said.

Nichols estimated that Quicken Loans spent "way more money" defending the case "than we were seeking." Damages sought at one time reached $25 million, although in the course of litigation they were whittled down to $10 million.


In pretrial skirmishing in federal district court in Detroit, Quicken won a series of rulings that protected the company from liability from 2006 onward; sliced the potential statutory damages by one-third (because any nonpayment of overtime was not willful); and got the company's chairman dismissed as an individual defendant.

Part of the strategy was to hire Morganroth & Mor-ganroth, home of Jeffrey Morganroth and his father, Mayer Morganroth, whose credits included representing Dr. Jack Kevorkian. As it became clear a trial would take place, Davis believed that Quicken needed a "well-recognized, highly experienced team of Detroit natives" to try the case to a jury.

The trial, which began in February, featured more than 40 witnesses. Out of 359 former employees who had joined the collective action, Nichols Kaster called 25 to testify that their work consisted mostly of sales.

Quicken's team aggressively called into question their testimony. The case boiled down to a "battle of credibility," Davis said, with the plaintiffs arguing that their job was "sales, sales, sales" while the defense insisted they had additional responsibilities that rendered them exempt.

The defense used contemporaneous documents to undermine the testimony. One former employee who complained ardently about her job on the stand was confronted with a letter she sent on her last day describing the position as the best she ever held, Davis said. Under cross-examination, several plaintiffs admitted lying on their job applications, Davis said.

The tough questioning could have backfired if carried too far, he acknowledged — raking low-level former employees over the coals would have risked offending the jury. The point was to note discrepancies in the evidence. "We picked our spots very carefully to show where people were perhaps not candid with the jury," Davis said.

The defense called current and former employees to the stand, by subpoena if necessary, to testify about their work activities. "We successfully showed time and time again that these plaintiffs were grossly exaggerating the amount of time they worked," Davis said. Some of the plaintiffs admitted to taking personal calls during work and operating side businesses while on Quicken's dime.
The plaintiffs contended that much of the sales work they did at the office was done over the telephone. But Quicken's phone system tracked the time employees spent on the phone, allowing the defense to show that the time on call in a given day averaged no more than three hours. "It didn't match up," Davis said.

Some of the plaintiffs' tactics backfired. That side called senior executives including Quicken's CEO to the stand, allowing friendly cross-examinations that targeted specific points the defense wanted to cover. "It allowed us to really draw out the really good statements of our case — that these people are financial professionals, that they're given a lot of discretion," Davis said.

After three days' deliberations, the jury returned a defense verdict on March 17. The company said in a formal statement that it hoped the victory would inspire "other job-creating companies to defend against meritless lawsuits which drain wealth and productivity from our society."

The case is now under appeal. Among other arguments, the plaintiffs cited Quicken's "improper and prejudicial opening and closing arguments." Nichols Kaster particularly objected to what it claims was Quicken's "appeal to local bias."

"Counsel referred to Quicken as 'a special, one-of-a-kind company' that is 'committed to the city of Detroit to create jobs,'" Nichols Kaster wrote. "In contrast, counsel repeatedly, deliberately, and pervasively referred to [Nichols Kaster] as an "out-of-state law firm that solicited clients to 'extort' money from the local defendant."

Nichols said the plaintiffs would also appeal a decision by the judge to not allow the jury to consider whether the employees' primary duties were sales. That was the "ultimate" question, he said, yet it was never asked.

The company, in its own motion filed on May 10, argued that after seven years in litigation, the plaintiffs "are not entitled to a judgment notwithstanding the jury verdict or a 'do-over.'"


  • Have a solid coherent strategy for trying the case before you stand up. It sounds trite, but you have to do it.
  • Have a specific point of what to ask each witness. With seven brokers in this case who testified for the defense, each testified to different aspects of the case. We had a very specific sense of which witnesses would make which points for us.
  • Have a clear understanding as early in the trial as possible about how to have the trial instructed. Here, the team held three conferences on that point alone.

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