Waterstone Mortgage Corporation

Status Reports

LITIGATION UPDATE - Posted January 4, 2021

The settlement for this case was approved by Judge Pratt on December 29, 2020. Last week we filed stipulations of dismissal with the District Courts and those stipulations can be viewed here and here. The litigation has been resolved.

LITIGATION UPDATE - Posted June 6, 2020

Plaintiffs and Defendant attended a mediation (virtually, via Zoom) on April 27, facilitated by Mediator Mark Rudy. Unfortunately, we were unable to resolve the claims during the day-long mediation, though the parties may continue to pursue settlement options through the mediator. In the meantime, we continue to move forward and litigate the claims, collectively in federal court and the 90-plus individual arbitrations.

INDIVIDUAL TRIALS COMMENCE - Posted December 6, 2019

During the week of November 18th, the lead Plaintiff’s individual arbitration case proceeded to trial before the arbitrator (Retired 2nd Circuit Judge) George C. Pratt – who handled the first collective trial against Waterstone. The parties submitted voluminous evidence and 3 days of testimony addressed the hours worked, the expenses borne by Claimant on behalf of Waterstone and how damages should be calculated. The parties will next submit opening and reply briefs to the arbitrator and a decision is expected in the first half of 2020. This case is the first of nearly a hundred individual arbitrations which are currently being conducted by the AAA and JAMS arbitration services.

DEVELOPMENTS IN VARIOUS CASES AGAINST WATERSTONE - Posted November 1, 2019

The class and collective action complaint in Johnson v. Waterstone Mtg. Corp. for 33 individual Plaintiffs was filed in the U.S. District Court for the Eastern District of Wisconsin on May 3, 2019. The case will be heard by U.S. District Judge Lynn Adelman. The case seeks to include as class members all current and former loan originators who have worked for Waterstone since August 1, 2010 in a non-supervisory capacity and whose employment agreements permit filing labor disputes in Court. The Court has not yet ruled on whether the action can proceed as a class or collective action. Waterstone has moved to dismiss 9 individuals, who it contends signed arbitration agreements which do not permit their claims being heard in Court. Plaintiffs have opposed Waterstone’s motion.

In addition to these 33 claims being heard in federal court, 48 individuals have filed individual arbitrations before the American Arbitration Association (AAA), and 41 individuals have filed individual arbitration claims against Waterstone before the JAMS arbitration service. In addition, the individual Named Plaintiff whose claim started this lawsuit will have a final trial of remaining issues in her individual case beginning on November 2019 before the original arbitrator, retired U.S. Circuit Judge George C. Pratt. Waterstone has now filed a motion in Court seeking to stop the pending arbitration. The parties in both AAA and JAMS arbitrations have been busy selecting arbitrators who are expected to begin the process of administering these cases promptly. Plaintiffs believe that while Waterstone’s appeal has certainly delayed its legal obligation to pay its LOs the amounts it promised them by contract, the appellate ruling does not affect the fact that Waterstone promised its LOs that it would pay them minimum wage and overtime – but did not. Waterstone’s appeal and the vacatur of the original ruling have substantially compounded its liability to LOs by forcing the LOs to file individual arbitrations before separate arbitrators – all of whom Waterstone must pay to individually hear claims that were already decided in the original proceeding.

A NEW FEDERAL COURT ACTION IS FILED AGAINST WATERSTONE - Posted May 8, 2019

Plaintiffs have filed a new federal court complaint in the Eastern District of Wisconsin – raising the same claims as the previous case – that Waterstone has cheated its Loan Originators out of the very pay it promised them when they were hired. The case is filed as a class and collective action, on behalf of those LOs who, by virtue of the particular employment agreement that Waterstone drafted for them – are allowed to go to court rather than being sent to forced arbitration.

7TH CIRCUIT VACATES TRIAL COURT’S AFFIRMANCE- Posted November 21, 2018

On January 10, 2018, weeks after Judge Crabb affirmed the arbitration award, Waterstone filed its notice of appeal with the Seventh Circuit Court of Appeals. Waterstone claimed that Judge Crabb erred in 2012 when she ruled that loan officers “must be allowed to join other employees” in the arbitration, when the arbitration agreement stated that LOs’ claims must be arbitrated on an individual basis. Waterstone asked the Seventh Circuit to reverse Judge Crabb’s 2012 decision and reverse her final judgment enforcing the arbitration award.

During the course of the appeal, the US Supreme Court was hearing a case on a similar issue. On May 21, 2018, the Supreme Court ruled that employers may require prospective employees to waive their right to participate in class actions as a condition of employment, reversing the previous decision of the Seventh Circuit prohibiting class action waivers. The Supreme Court reversed the Circuit and overruled the National Labor Relations Board (NLRB) which had ruled in In re D.R.Horton that such waivers violated the National Labor Relation Act’s prohibition on “yellow dog” contracts by which employers seek to prevent workers from engaging in “concerted activity” as a condition of taking a job. District Judge Crabb had previously ruled in this case that Waterstone’s class action waiver was invalid because she was obliged to give deference to the NLRB’s (now overruled) decision.

On October 22, 2018, the 7th Circuit vacated the District Court’s affirmance of the arbitral award in this case and remanded for the District Court to consider the “gateway” issue of whether the arbitration agreement in the case permits class, collective or joinder of actions. On November 6th, Plaintiffs moved the 7th Circuit to clarify that one of the gateway issues for the District Court to consider includes whether Waterstone waived its argument that the District Court should consider the issue instead of the Arbitrator. Click here to review the motion for reconsideration. On November 20th, the Circuit denied Plaintiffs’ petition for rehearing and rehearing en banc.

The case now proceeds to the District Court, for District Judge Crabb to determine whether the Arbitrator’s decision permitting the case to be heard on a collective action basis was correct.

ARBITRATION AWARD CONFIRMED – Posted December 6, 2017

On December 4, Judge Crabb confirmed the arbitration award, granting damages to 175 loan originators who opted into the case. The damages and attorney fees total over $10.5 million. Waterstone has 30 days from the judgment to either file a notice of appeal or pay.

This ruling is a tremendous result for the LOs who have opted in.

Loan officers who worked for Waterstone but did not opt into the Herrington case can join the new case against Waterstone, Werner v. Waterstone.

ARBITRATOR PRATT ISSUES FINAL AWARD – POSTED JULY 7, 2017

Waterstone Loan Originators won a $10,586,770.00 victory! On July 5, 2017, Arbitrator Pratt issued a Final Award in this case. He awarded the 175 Loan Originator Claimants $7,267,919 in unpaid minimum wages, unpaid overtime wages, and liquidated damages. Click here to read the final award.

In addition, Arbitrator Pratt awarded Getman Sweeney Dunn full attorneys’ fees, a multiplier enhancement of 20%, and costs for a total of $3,298,851. Arbitrator Pratt stated:

“Throughout, Claimants’ attorneys have performed ably, efficiently, and ethically, displaying admirable expertise, professionalism, and diligence in representing their many clients.”

In addition, the Named Claimant was awarded an incentive fee of $20,000 for bringing the case and representing the other 174 LOs throughout the litigation. Click here to read Arbitrator Pratt’s Decision and Partial Final Award on Attorney’s Fees and Costs.

If you worked for Waterstone as a Loan Originator within the last three years and you may have claims for unpaid minimum wages, overtime wages, and unreimbursed business expenses. Contact Getman Sweeney Dunn to learn about your rights. The call is confidential and free.

ARBITRATOR PRATT FINDS WATERSTONE OWES LOs OVERTIME AND MINIMUM WAGE – POSTED MAY 16, 2017

Following a two week trial held in October and December 2016, Arbitrator George C. Pratt has ruled that 174 of Loan Originator Claimants, those who worked after August 2010 (on contracts which called not just for commissions), are entitled to minimum wage and overtime payment. Click here to read Arbitrator Pratt’s Partial Final Award. During the trial, Waterstone stipulated that LOs worked 52.5 hours per week and bore unreimbursed expenses on behalf of Waterstone of $100 per week for the period August 2010 to the present. The Arbitrator also found:

1. Waterstone has waived and is estopped from asserting the “outside sales exemption” defense to Claimants’ FLSA claims.
2. Claimants’ claims under Wisconsin law are dismissed.
3. Claimant’s claims under contract law are dismissed.
4. Claimants’ damages under the FLSA shall be determined in the manner and under the principles described above in this Partial Final Award.
5. Waterstone’s contractual clawback process does not apply.
6. Claimants are entitled to an additional amount of attorneys’ fees and costs to be paid by Waterstone in an amount yet to be set by the Arbitrator.

In reaching this decision, Arbitrator Pratt ruled that:

“Waterstone’s President Egenhoefer and its Senior Vice President Allen acknowledged in their depositions that its minimum-wage-plus -overtime compensation system was adopted in order to comply with federal (i.e. FLSA) and state wage requirements. At the hearing, however, they both told a story that the change from commission-only was solely so that they could use a new computerized compensation program. I found their hearing testimony on this point to be incredible.

In making the change, Waterstone was obviously following the advice of counsel in how to comply with governmental requirements. It established the much-disliked time-reporting system in order to legally comply with the minimum wage and overtime regulations of the FLSA and state laws. Then it tolerated or told or its branch managers to arrange that the LOs would not report more than 40 hours. In this way, Waterstone complied in form with FLSA’s overtime requirement, but in practice it sought to avoid having to make the overtime payments that otherwise would have been made.

In practical effect, Waterstone represented to its LOs, not that they were exempt from coverage under the FLSA as it now claims, but that they were non-exempt and that it was providing for them the protections of the FLSA. It is true, as Waterstone repeatedly emphasizes, that most of the LOs either were ignorant of or did not care about the protections and benefits of the FLSA. They regarded their work as commission-based, and they viewed the payments for hours worked as a draw against the commissions they hoped to earn. The issue, however, is not how the LOs thought about their compensation or what they signed on to in the agreements prepared and required by Waterstone. The FLSA is a collection of rules established to fix the minimum compensation to be paid to employees and to do so apart from what the parties might think, understand, or agree to. The FLSA thus overrides both the employers’ and the employees’ understandings to the extent that their mutual arrangements in actual practice fail to satisfy the minimum standards laid down by the statute.”

For further information about the impact of the decision, please contact Getman, Sweeney & Dunn.

WATERSTONE HELD IN CONTEMPT – POSTED MAY 5, 2015

In February 2015, Claimants learned that in or about March 2014, Waterstone’s President and CEO had circulated a prohibited letter to current LOs, telling them they were required to sign new agreements concerning how to bring any claims against Waterstone, such as by going to arbitration or court. The letter advised LOs that signing the agreement would affect their ability to participate in this case. Since Arbitrator George C. Pratt previously found that the letter was misleading and coercive, and since Waterstone had been previously sanctioned for sending essentially this same letter, and since the terms of the letter suggested LOs could not join this case, Claimants moved to hold Waterstone in Contempt. On March 25, 2015 Arbitrator Pratt ruled that the emailing of Egenhoefer’s letter was a contempt of the prior order. Arbitrator Pratt ordered Egenhoefer to send a corrective letter and directed that Getman Sweeney send LOs who had not opted into this case and were sent the prohibited Egenhoefer letter a new notice and that they be given a new opportunity to join this case. LOs who received the prohibited Egenhoefer letter and did not previously join this case have until June 18, 2015 to mail, email, or fax a completed, consent to sue form in order to join this case. LOs who now join the case will not be required to sit for discovery, such as producing documents or sitting for deposition.

WATERSTONE ADDRESS ERRORS REQUIRE REMAILING NOTICE – Posted June 26, 2104

Because Waterstone had made errors in approximately one-third of the addresses, many LOs did not receive the Notice informing them about their opportunity to join this overtime and minimum wage case. Arbitrator Pratt addressed concerns about the address errors in his June 18, 2014 Ruling and ordered us to remail the Notice to LOs whose corrected addresses had been discovered.

LOs who receive a re-mailed Notice may file a Consent to Sue form up until August 25th if they wish to join. If any class members do not receive notice of the case through these address errors, they may (through Getman Sweeney or on their own) later make an application to join the case, up until the time the case is tried to Arbitrator Pratt.

If you have any questions about the case or have questions about whether to participate you may call Monica Ayres at Getman Sweeney (845) 255-9370 to discuss any concerns you may have. All calls are privileged and confidential.

Arbitrator Pratt Directs Notice To LOs – Posted May 2, 2014

On March 4, 2014, Arbitrator Pratt issued a ruling that this case would proceed as a “collective action.” A collective action means that individuals who wish to have their overtime and minimum wage claims heard as part of the case, must file a “Consent to Sue” form or their claims will not be considered. LOs who file the Consent to Sue form agree to representation by Named Claimant Pamela Herrington and attorneys Getman & Sweeney. LOs may also obtain their own counsel independently and file their own individual lawsuits if they wish.

On April 23, 2014, Arbitrator Pratt issued a ruling which directed that a Notice be issued advising Waterstone Loan Originators who worked for Waterstone at any point between November 28, 2008 and the present, of their rights about participating in the case. The Notice also contains a Consent to Sue form for LOs who wish to join the case and be represented by Getman Sweeney. LOs may file a Consent to Sue form up until July 6, 2014 if they wish to join.

Getman Sweeney will mail and email the Notice and Consent to Sue to LOs, whose names and addresses will be supplied by Waterstone. Individuals who have questions about the case or have questions about whether to participate may call Monica Ayres at Getman Sweeney (845) 255-9370 to discuss any concerns they may have. All calls are privileged and confidential.

NLRB Hearing Re-Scheduled for August 1st- Posted 7/12/12

The NLRB is proceeding forward against Waterstone, claiming that Waterstone’s arbitration agreement illegally waives class and collective actions and that this clause must be deleted from the employment agreement. Waterstone claims that it did not require employees to sign the employment agreement as a condition of employment and that such signing was purely voluntary. It also contends that the NLRB’s D.R. Horton decision is wrongly decided. Any loan officers with contrary information should contact Getman Sweeney. The hearing will be conducted by NLRB Administrative Law Judge Paul Bogas at the NLRB’s regional office in Milwaukee, WI on 8/1/12 at 9 am. Getman Sweeney will also be representing the charging party at the hearing.

Court Requests Additional Briefing – Posted 3/9/12

The Court requested additional briefing from both sides on the issue of whether the Court has jurisdiction to consider the illegality of the class action waiver provision in the arbitration agreement. The National Labor Relations Board recently held that class and collective action waivers are unlawful. The question is whether only the NLRB can reach this question or whether the Court may apply the NLRB’s ruling. Plaintiffs filed a thorough brief explaining why the Court must consider whether the arbitration clause is illegal and pointing out that the NLRB has directed Courts to consider such illegality. Click here to review the Plaintiffs’ brief filed today. Waterstone also filed a brief in support of its position that the Court cannot consider the question. Click here to review Waterstone’s brief. The matter will now be considered by the Court.

Plaintiffs Move Court To Compel Discovery – Posted 2/23/12

Plaintiffs have asked the Court to compel Waterstone to participate in discovery concerning the appropriateness of this case for class certification. Click here to review Plaintiffs’ Motion.The Court had previously set a deadline of June 1st for Plaintiffs’ class certification motion. Waterstone refuses to answer discovery claiming that its motion to dismiss is reason why it should not comply. The Court however previously refused to stay discovery in this case. Within an hour after Plaintiffs’ motion, Defendants asked the Court to issue a stay of discovery. Click here to review Defendant’s Motion to Stay. The disputes will now be briefed by both sides.

Herrington Charges Waterstone With Violating National Labor Relations Act (NLRA) – Posted 1/13/12

Plaintiff Herrington filed a “charge” against Waterstone Mortgage Corporation. The charge is based on a recent decision of the National Labor Relations Board known as D.R. Horton, which held that a company may not require employees to go to arbitration and waive their right to proceed by class or collective action. The NLRB found this type of clause (which Waterstone placed in paragraph 13 of its employment agreement) to violate the NLRA, which protects employees’ ability to engage in “concerted activity.” Herrington had given Waterstone a chance to voluntarily remove the unlawful clause from its agreement, but Waterstone refused, prompting the charge, which was filed with Region 30 of the National Labor Relations Board. The Board will now investigate to determine whether it will take measures against Waterstone for the clause. If any employees have been contacted by Waterstone management concerning this case or the arbitration clause, please call Getman Sweeney to review the situation.

On January 19, 2012, U.S. Magistrate Judge Stephen L. Crocker issued a scheduling order in this case. Click here to review the scheduling order.

The Arbitration Clause In WMC’s Employment Agreement – Posted 1-25-12

WMC refuses to withdraw the arbitration clause containing an unlawful class and collective action waiver. Getman Sweeney has prepared a short video concerning the unlawful arbitration clause contained in WMC’s employment agreement.

Motions Made and Answered

Defendant Waterstone has moved to dismiss the case to send the case to arbitration. Waterstone claims that the arbitration clause of the contract (paragraph 13) requires arbitration on an individual by individual basis. Plaintiffs believe this argument is frivolous for numerous reasons. Click here to review Plaintiffs’ brief in opposition to Waterstone’s Motion to Dismiss. On the same day that Plaintiffs filed their motion in opposition to arbitration, the National Labor Relations Board ruled that class and collective action waivers, as is contained in the Waterstone employment agreement, constitute an unfair labor practice. Click here to review the NLRB’s decision in the D.R. Horton case. In light of the fact that the arbitration clause with class and collective action waiver constitutes a clear violation of federal law, Plaintiffs are asking Waterstone to withdraw its motion to dismiss, demanding that Waterstone remove the offending clause from the employment agreement, and demanding that Waterstone take further steps to notify employees that the arbitration clause is invalid.

Video Information About This Lawsuit – Posted 12/2/11

Here’s a short video prepared by Getman Sweeney about this case.

Complaint Filed – Posted 11/28/11

Plaintiffs initially served a 10 day demand on the company as called for in the employment agreement. The document which begins a lawsuit is called a “complaint.” Plaintiffs have now filed a complaint in this case with the Western District of Wisconsin. Click here to review the complaint that has been filed in court.

Answers to Common Questions – Posted 11/18/11

The complaint covers claims for overtime and minimum wage back pay under the federal Fair Labor Standards Act (“FLSA”) . The specific violations claimed are that the Defendants failed to pay minimum and overtime wages to its loan officers and made illegal deductions from their pay.

Damages sought under the FLSA include back minimum and overtime wages, an equal amount of liquidated damages, interest, and fees and costs for each violation. Damages for the state law claims include back minimum wage and overtime pay, recovery of illegal deductions, liquidated damages, interest, and fees and costs.

The FLSA provides for liquidated damages in an amount equal to the back pay owed and allows claims going back three years from when someone affirmatively joins the case by filing a Consent to Sue. You must send us a signed Consent to Sue to bring your federal wage and hour claims in this action.

Under the FLSA, you are entitled to make claims for the period extending back three years from the date your Consent To Sue Form is filed in the lawsuit. Waterstone will be entitled to argue that its violations were not willful and that its claims should only be limited to a two-year period preceding the filing of your Consent to Sue. This two or three year period is called the “statute of limitation.”

The state contract claims have different statutes of limitations.

To bring claims under the FLSA for back wages and an equal amount of liquidated damages in this action, you must affirmatively join the case by filing a Consent to Arbitrate.

No. The attorneys representing plaintiffs are Getman & Sweeney, PLLC and they are handling this case on a contingent basis and will only be paid when we win through a settlement or final judgment.

You are not part of the FLSA case until your Consent to Sue Form is returned to the plaintiffs’ attorneys and filed. If you delay in filing the , part or all of your claim may be barred by the statute of limitations.

The law prohibits retaliation for joining an overtime lawsuit. If any employee suffers retaliation, Waterstone would be liable for at least double the injury caused to the employee, and possibly much more. Notify us immediately if you think any retaliation occurs. Retaliation is rare in overtime cases, because an employer can suffer such serious penalties.

The FLSA claims in this lawsuit cover every worksite nationwide in the U.S.A. If you worked for Defendant Waterstone anywhere in the country, you can bring FLSA claims in this case.