Los Angeles Times July 17, 2001

Auto Club Claims Adjusters File Lawsuit Over Overtime

Labor: Litigation is similar to case involving $90-million verdict against Farmers

By Lisa Girion, Times Staff Writer

The lawyer who won $90 million in overtime pay against Farmers Insurance Exchange filed a proposed class-action lawsuit against the Automobile Club of Southern California on Monday, alleging it too has been cheating its claims adjusters out of premium pay.

The allegations parallel those made by the Farmers adjusters, said Steve Zieff, the San Francisco lawyer who represents plaintiffs in both cases. "These are production workers who are owed overtime," Zieff said.

Executives of the Los Angeles-based Auto Club had not seen the suit and had no comment, spokesman Jeff Spring said.

Cheryl Miskell, one of two adjusters named in the Auto Club suit, said she works 50 to 60 hours a week, most of it on the road, inspecting damaged cars and trucks. A 20-year veteran of the company, Miskell, 52, said her caseload is so great that she rarely has time for a break and usually eats lunch in her car.

The Riverside woman said she hopes to continue working at what she called "a fine company," but decided to sue after growing frustrated with internal efforts to win overtime pay for the adjusters.

"We've been very loyal. This isn't a grudge thing," said Miskell, who is paid a salary of about $50,000 a year. "But the hours and the workload have been brought up to the company for years, and the company has absolutely refused to address it."

The Auto Club employs about 600 adjusters and considers most of them exempt from overtime pay, Spring said.

The suit, which was filed in Orange County Superior Court, says that the adjusters are really production workers because they have so little control over their jobs and so little discretion over the settlements they propose based on a uniform computer program, said Aaron Kaufmann, an Oakland lawyer who also represents the adjusters.

At least 10 other insurance companies and hundreds of other employers are facing class-action overtime suits by so-called managers and administrators in California, which has stricter wage and hour laws than other states.

Most cases settle once a judge approves a class.  The case against Farmers was believed to be the first class-action overtime lawsuit to go to a state court jury for a damage award.

Farmers has vowed to appeal, and many employers hope the company will win some kind of relief that could inoculate other businesses from huge awards. But lawyers and legal scholars said the decision appears well-grounded.

"This $90 million is a large number, but it's just compensation for the work people have done," said Henry Heuer, a lawyer who represents two claims adjusters who won a $135,000 overtime judgment against Farmers a year ago in federal court in Los Angeles.

A week ago, an Oakland jury awarded 2,400 current and former Farmers claims adjusters $90 million in the damages phase of a trial two years after the judge deemed them eligible for overtime pay.

An appellate court unanimously upheld that decision March 5, and the California Supreme Court denied Farmers' request for review. Although Farmers may be able to appeal the decision and the damages, legal scholars said the outcome very well could be the same.

The appellate "decision is thoughtful, well-researched, well-reasoned, and so it's not obvious to me that they would overturn it," said Catherine Fisk, a Loyola law professor. "It appears that the court of appeal got it right."

Fisk said Farmers could still challenge the case on procedural grounds, such as the way the jury was instructed.

Farmers is exploring its options, including "everything relating to damages and errors occurring at trial," said Ellis Horvitz, an Encino lawyer representing the company on appeal.