Boyd v. Bank of America Corp. (109 F. Supp. 3d 1273, 2015)

United States District Court for the Central District of California 2015-05-06

Citations

Full opinion text

ORDER GRANTING PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT [268] AND DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT, OR, IN THE ALTERNATIVE, PARTIAL SUMMARY JUDGMENT [297]

DAVID O. CARTER, District Judge.

Before the Court are Plaintiffs’ Motion for Partial Summary Judgment (“Pls. Mot.”) (Dkt. 268) and Defendants’ Motion for Summary Judgment, or, in the Alternative, Partial Summary Judgment (“Defs. Mot.”) (Dkt. 297). Oral arguments were held on April 20, 2015. Having considered the arguments raised by the parties, the Court rules as follows: Plaintiffs’ Motion is GRANTED and Defendants’ Motion is DENIED. The Court finds that the federal and state administrative and professional exemptions and the federal highly compensated employee exemption are not applicable. As to Defendants’ Motion, summary judgment is denied as to Plaintiffs’ meal period and rest period claim. In addition, the Court finds that issues of fact exist as to good faith and willfulness. Therefore, summary judgment is denied as to Plaintiffs’ itemized, wage statement claim and waiting time penalties claim and as to the FLSA’s statute of limitations and liquidated damages provisions.

I. Background

Plaintiffs are members of a class of current and former residential real estate appraisers (“Appraisers”) for Defendant LandSafe Appraisal Services, Inc. (“LAS”). The gravamen of their claims is that LAS misclassified them as exempt from overtime under California and federal law. Plaintiffs and Defendants Bank of America, Corp. (“BAC”), LandSafe, Inc. (“LSI”) and LAS have filed cross-motions for summary judgment, primarily regarding the applicability of a number of state and federal overtime exemptions. Defendants also seek summary judgment as to Plaintiffs other state law claims.

A. Procedural History

Plaintiffs filed this collective and class action suit on April 9, 2013. Compl. (Dkt. 1). The Second Amended Complaint (“SAC”), filed on June 26, 2013, asserts claims for: (1) violations of Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 207; (2) violations of California Labor Code §§ 510, 1194, and 1198, and Industrial Welfare Commission (“IWC”) Wage Order(s); (3) failure to provide itemized wage statements, California Labor Code § 226; (4) failure to provide and/or authorize meal and rest periods, California Labor Code §§ 512, 226.7, and IWC Wage Orders; (5) violations of California Business and Professions Code § 17200; (6) waiting time penalties, California Labor Code § 203; and (7) civil penalties pursuant to Labor Code Private Attorneys General Act of 2004 (“PAGA”), California Labor Code § 2698, et seq.

The SAC asserts claims on behalf of two putative classes, (1) individuals that have worked for Defendants during the relevant time period as “Residential Appraisers and other similar positions,” and (2) individuals that had worked for Defendants during the relevant time period as “Review Appraisers and other similar positions” (“Review Appraisers”). SAC ¶¶ 1, 20. Plaintiffs allege Defendants maintain a uniform policy misclassifying hundreds of California-based real estate appraisers as exempt. Id. ¶ 24. As a result, Plaintiffs maintain, these employees were not paid overtime for long hours and were not provided meal and rest periods, in violation of the California Labor Code. Id. ¶ 2. The SAC defines the Collective Class as:

All persons who are or have been employed by Defendants as Appraisers, including employees with the job title ‘Staff Appraiser’ ‘Residential Appraiser’ and any other employee performing the same or similar duties for Defendants and Review Appraisers (‘Review Appraiser,’ ‘Senior Review Appraiser;’ or positions consisting of similar job duties) within the United States at any time from three years prior to the filing of this Complaint to the final disposition of this case.

Id. ¶ 20. The SAC defines the California Class similarly, but with a four-year statute of limitations. Id. ¶ 36. The SAC also defines two sub-classes for the California penalty claims, based on the different statutes of limitations for those claims. Id. ¶¶ 37, 38.

The parties have settled their claims regarding Review Appraisers (Dkt. 276). Therefore, the term “Appraisers” in this order refers to the remaining Staff and Residential Appraisers.

Conditional class certification under the FLSA was granted on December 11, 2013 (Dkt. 109). The Court-approved FLSA § 216(b) Notice was mailed to eligible Appraisers nationwide on March 5, 2014. On June 27, 2014, the Court granted Plaintiffs’ motion for class certification, and Terry Boyd, Sonia Medina, Ethel Parks, and Linda Zanko were appointed class representatives (Dkt. 232).

Plaintiffs’ filed their Motion for Partial Summary Judgment on November 12, 2014. On December 17, 2014, for judicial economy reasons, the Court rescheduled the hearing date for April 20, 2014, and indicated that it wished to hear all dispositive motions together, after the close of discovery. Order, Dec. 17, 2014 (Dkt. 291). Defendants filed their Motion for Summary Judgment on February 20, 2015 (Dkt. 297).

B. Facts

The pending motions primarily address the application of various FLSA and California overtime exemptions. Many of the facts material to the application of the overtime exemptions turn on the nature of the Appraisers’ work, and are undisputed. The Court will reference the Plaintiffs’ Statement of Uncontroverted Facts and Conclusions of Law (“PUF”) (Dkt. 268-2); Defendants’ Response to PUF (“DR”) and Statement of Additional Material Facts (“DSAM”) (Dkt. 278); Defendants’ Statement of Uncontroverted Facts and Conclusions of Law (“DUF”) (Dkt. 297-2); and Plaintiffs’ Response to DUF (“PR”) and Statement of Additional Material Facts (“PSAM”) (Dkt. 300-1) and will rely on the exhibits and deposition testimony before the Court.

1. Business Structure

LAS is a wholly-owned subsidiary of BAC. PUF 55; DR 55. LAS provides market value appraisals for properties in connection with residential mortgage loan transaction to subsidiaries and divisions of BAC. DUF 1-2. Collectively, BAC and these subsidiaries and divisions will be referred to as Bank of America (“BofA”). BofA is in the business of offering mortgages for residential properties. Valuation opinions (appraisals) are one of the factors that BofA relies on to make lending decisions. DUF 4; PR 4. BofA uses appraisals to evaluate risk or exposure for each loan they issue, and consider it as one factor for determining whether the risk level for the loan is acceptable — thereby impacting lending decisions. DUF 25-26. In addition, in order for a mortgage to be eligible for sale in the secondary market to Fannie Mae or Freddie Mac, .BofA must obtain an appraisal. PUF 28. Bad appraisals can have negative consequences for BofA, the borrower, and subsequent loan purchasers. DUF 5-6; PR 5. For example, in rare circumstances, BofA may be forced to repurchase the mortgage thereby bearing the cost of default. DUF 30; PR 30; Deposition of Kenneth S. Nicholson, 30(b)(6) Witness for Defendants (“Nicholson Dep.”) at 108:25-109:7.

2. Job Duties

Appraisers appraise and generate appraisal reports for properties on which BofA offers mortgages. PUF 1; DR 1. Each appraisal report relates to a single BofA mortgage on a single piece of residential property. PUF 2, 8; DR 2. An appraisal is required every time BofA offers a mortgage on a house.

Appraisers, on average, generate around two appraisal reports on a typical workday. PUF 3, DR 3. Appraisal assignments, are distributed through an automated software program called the “Appraisal Port.” Nicholson Decl. at 158:25. Typically, appraisers have several assignments “in [their] pipeline” at one time. Nicholson Dep. at 251:15-16. Appraisers request a specific capacity, or the number of assignments they are willing to accept to complete in a given geographic area, which is confirmed by their district manager. Id. at 276:4-9. However, there is a minimum capacity that Appraisers must be willing to fill. If Appraisers fail to complete an assignment, it may count against them. Id. at 276:10-15. Collectively, LAS Appraisers generate 20,000 reports each month. PUF 6.

Appraisers are paid on commission, incentivizing Appraiser productivity. PUF 32. Specifically, for each appraisal produced, Appraisers receive “billings.” PUF 37. Appraisers are ranked on their billings, a measure of their production. Nicholson Dep. at 192:3-8. Appraisers’ pay is calculated based on their billings, and the quality and the timeliness of their reports. Nicholson Dep. at 85:3-86:10. If an Appraiser regularly performs below expectations regarding her amount of billings, she may be terminated. Id. at 200:12-15,19.

3. Appraisal Reports

a. Forms

In order to complete an appraisal, the Appraisers complete appraisal reports on uniform appraisal report forms, for example, the Fannie Mae Form 1004 Uniform Residential Appraisal Report. Decl. of Bryan Schwartz in Support of Motion for Partial Summary Judgment (“Schwartz Decl.”) (Dkt. 269) Ex. B (“Form 1004”). This form is used in approximately 65% of the appraisals that Appraisers conduct. PUF 12; DR 12. The form lays out the information that the Appraiser must collect concerning the property. Some information may be retrieved from databases {e.g., tax information). Other information must be collected from an in-person inspection {e.g., “description of interior”). Some entries on the form are automated, check-the-box format, others require narrative. entries {e.g., “Describe the condition of the property”). In addition, some of the factors are objective {e.g:, whether the foundation has a crawl space), some are more subjective {e.g., “Does the property generally conform to the neighborhood ... ?”). Form 1004 at 1. Appraisers must identify comparable sales (“comparables”) and their descriptions on the form. Id. at 2. The form has a lengthy section for “additional comments.” The form includes the Appraiser’s opinion as to the value of the property. Id. at 2-3.

b. Deadlines

LAS sets minimum production goals and deadlines for Appraisers. DUF 59, 61; PR 60. This minimum goal could be achieved in about 30 or 40 hours per week of work. Declaration of Michael Carrol (“Carrol Decl.”) (Dkt. 280-1) Ex. 3 ¶ 12. Each report must be completed within a certain amount of time. PUF 40. Appraisers typically work out of their homes, and set their own schedule for completing appraisals; although, they have to adhere to the “turn-times.” DUF 58, 60; PUF 58; Deposition of Ethel Parks (“Parks Dep.”) at 226:4-6. In her deposition, named Plaintiff Ethel Parks explained that at one point she told her manager that due to the strict “turn times,” she did not have time to eat lunch or go to the bathroom. Parks Dep. at 225:19-226:10. Many Appraisers, in contrast, attest that they could take breaks whenever they wanted and had plenty of time to eat during the day, see, e.g., Ashley Deck ¶ 11; however, there was no written policy for taking breaks. Nicholson Dep. at 189:10-190:23.

c. Guidelines

In conducting appraisals, Appraisers must follow standard policies and guidelines. PUF 22; DR 22. The Uniform Standards of Professional Appraiser Practice (“USPAP”) represents generally accepted and recognized standards of appraisal practice in the United States. DUF 17. California requires all appraisers to comply with USPAP. DUF 18. LAS and BofA also issue certain guidelines Appraisers must follow in performing their jobs. See, e.g., LAS Appraisal Reporting Requirements — Unacceptable Appraisal Practices (“UAP”) (Sealed Dkt. 127) (defining unacceptable comparables); External Circular, Appraisal Reporting Requirements (“External Circular”) (Sealed Dkt. 127) (for example, requiring photographs of property). Plaintiff Terry Boyd explained that the guidelines “pretty muph standardize[ ] the appraisal process.” Boyd Dep. at 139:2-19. Other Appraisers assert that the regulations still leave room for Appraisers to exercise significant discretion and independent judgment. See, e.g., Carrol Decl. ¶ 7. Michael Carrol, who was a residential staff appraiser, asserts that while “the work of an appraiser is guided by guidelines and company policies, appraisers are expected to go beyond the guidelines whenever necessary to the determination of value.” Id. ¶ 8.

d. Appraisal Process

To generate a report, Appraisers must inspect, research, and analyze a property to develop a valuation opinion. Appraisers spend their days engaged in a variety of activities related to generating a report. For each property, Appraisers have to identify comparable sales. See, e.g., Parks Dep. at 110:15-115:19. To select comparables, Appraisers pull standard data about a property from BofA databases and review closed, pending, and active sales in the neighborhood or market area in order to identify three “comparable” sales. See, e.g., id. In the process of selecting comparables, Appraisers must make a number of judgments as to market area, and defining the market area. Nicholson Dep. at 316:23-317:1. According to the guidelines, the comparables should be selected from the subject neighborhood when comparable sales or listings are located within the subject neighborhood. See, e.g., Parks Dep. at 115:3-19; UAP at 1. However, under certain circumstances, Appraisers may use their judgment to select properties outside of the neighborhood if there are no comparables within the neighborhood or if the property is unique. Nicholson Dep. at 95:5-13, 320:25-321:5.

Appraisers also typically physically inspect the subject properties. In her deposition, Plaintiff Ethel Parks explained she sometimes spent several hours in a day driving to the subject property. Id. at 130:6-8. A physical inspection of the property can take 30 minutes up to several hours for a large mansion. Id. at 127:5-8.

After identifying comparables and completing the physical inspection, Appraisers fill out the appraisal report. This takes anywhere from 2-4 hours or more. Id. at 148:1-17. The guidelines require certain information be included in the appraisal report, for example photographs and floor-plans. Id. at 150:5-9; External Circular at 1.

To come up with a final value for a piece of property, there is no exact mathematical formula. DUF 33. Instead, Appraisers apply an extraction method, or “match pair analysis,” to generate an estimated value based upon similar properties in the area (the comparables) and a comparison of different qualities or features of the properties. DUF 33; Deposition of Sonia Medina-Kistner (“Medina Dep.”) at 100:9-25; Parks Dep. at 138:25-139:17. For example, Appraisers consider property-specific characteristics (whether the property has a swimming pool, the number of bedrooms or bathrooms) as well as local market conditions that could impact demand. Applicable guidelines and the information required on the forms generally determine relevant adjustments to the value of comparable properties in order to generate a final valuation. Deposition of Terry Boyd (“Boyd Dep.”) at 191:18-192:17. However, Appraisers must sometimes operate outside of the guidelines when appraising complex or unique properties. See, e.g., Carrol Decl. ¶ 9.

The parties disagree about the relative skill and judgment required to be an Appraiser. Plaintiffs insist that the appraisal process simply involves plugging in numbers and other easily observable data based upon clear guidelines in order to generate an estimate as to property value. See PR 53. Defendants argue that an appraisal requires an expert eye, and a keen independent understanding of market conditions, to generate a highly informed valuation opinion. See, e.g., DUF 53. In the Court’s view, the truth lies somewhere in the middle. That is to say, generating an appraisal report requires strict adherence to guidelines limiting variables that Appraisers may consider under most circumstances, and at the same time, requires independent judgment and discretion as to how to select the data Appraisers are required to consider (which comparables in what market area?), how to assess market' trends (will a closing a factory effect property values in the future?), and generate a final value (what matters more, a sun-deck or a pool; walking distance to a school or a short drive to a grocery store?).

It appears to the Court that what matters, above all, is that Appraisers show their work. With real estate valuation, there is no one “right” answer. A house does not objectively or absolutely “cost” a certain amount. Rather, the value of a home is what one person is willing to pay on a certain day. So an Appraiser gives an informed opinion, not a factual assessment, about the value of the property. It seems that the exact number therefore matters less than the uniform process of getting to the number — a process that BofA can rely on to get supportable results (not results that are necessarily “right” or “wrong”). In the end, an appraisal is one piece of data that BofA considers in making its own judgments about its loans. Those making the lending decisions must have an understanding that an appraisal is not an absolute truth about the value of the property, but is an informed estimate generated by data and human judgment.

4.Review Process

After completing a report, the Appraiser submits the report for review. PUF 14. All of the reports are subject to automated review. Id. at 356:7. The automated review process checks for obvious errors or omissions, for example, failing to sign a report or whether the appraised value falls within the adjusted sale prices of “comparable sales.” Id. at 357:20-21, 358:5-8. Issues like this will be sent back to the Appraiser. Id. Approximately 30% of appraisals are manually reviewed by Review Appraisers or managers. Id. at 356:14-16. If a reviewer finds an error in a report, the report can be rejected, and the Appraiser will typically address the error. Id. at 317:9-11. On rare occasions, the reviewer may ask for more information, for example, more comparables or pictures. Parks Dep. at 166:21-167:7. Repeated errors will affect the Appraiser’s compensation. Nicholson Dep. at 85:24-86:5.

After the report is reviewed, LAS certifies the Appraiser’s valuation opinion and it is incorporated into BofA’s loan package. Nicholson Dep. at 156:24-157:7; DUF 23. In the end, BofA charges its customers (the borrowers) a fee for the appraisal, typically in the amount of $400. PUF 30.

5.Communication with Management

Appraisers do not regularly communicate directly with management. According to a corporate program, Appraisers may provide feedback on issues of concern, but it is not part of their general job duties. Nicholson Dep. 132:7-133:5. Appraisers do not communicate directly with BofA’s loan officers who determine whether to issue loans. PUF 19, DR 19. Appraisers also do not communicate with eventual borrowers/homeowners. PUF 20. Finally, Appraisers do not supervise anyone. PUF 16.

6.Training

No degree beyond a high-school diploma or GED is required to become an Appraiser. PUF 42. Many appraisers do not have college degrees, and those who do have obtained them in a wide variety of topics. PUF 43-44.

To become a real estate appraiser, class members undergo several weeks of classes and extensive on-the-job training.

Appraisers must be licensed by their state. PUF 46.

Federal law tasks the Appraiser Qualification Board (“AQB”) with implementing minimum standards for appraisers across the country. DUF 9. The standards currently require 150 total hours of classroom training, along with 2,000 hours of supervised on-the-job experience, and passage of the state test to qualify for a standard residential appraisal license. PUF 47; Schwartz Decl. Ex. G (AQB Standards). Each state must implement appraiser certification requirements that meet the education requirements issued by the AQB. DUF 10. All states in which Plaintiffs are located require approximately the same classroom hours and hours of on-the-job experience to obtain a residential appraiser license, except that some states recognize only a “certified” residential license, which requires more class hours and more experience hours than a regular license. PUF 48. Since 2009, LAS has sought to hire only “certified” appraisers. DR 47. Certified appraisers .must complete 200 hours of core curriculum, hold a 2-year associate’s degree or equivalent, and have 2,500 hours of- on-the-job experience. DUF 15; PUF 52. The class includes both certified and non-certified appraisers. PUF 50.

II. Legal Standard

Summary judgment is proper if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Summary judgment is to be granted cautiously, with due respect for a party’s right to have its factually grounded claims and defenses tried to a jury. Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The court must view the facts and draw inferences in the manner most favorable to the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); Chevron Corp. v. Pennzoil Co., 974 F.2d 1156, 1161 (9th Cir.1992). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact for trial, but it need not disprove the other party’s case. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. When the non-moving party bears the burden of proving the claim or defense, the moving party can meet its burden by pointing out that the non-moving party has failed to present any genuine issue of material fact as to an essential element of its case. See Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir.1990).

Once the moving party meets its burden, the burden shifts to the opposing party to set out specific material facts showing a genuine issue for trial. See Liberty Lobby, 477 U.S. at 248-49, 106 S.Ct. 2505. A “material fact” is one which “might affect the outcome of the suit under the governing law....” Id. at 248, 106 S.Ct. 2505. A party cannot create a genuine issue of material fact simply by making assertions in its legal papers. S.A. Empresa De Viacao Aerea Rio Grandense v. Walter Kidde & Co., Inc., 690 F.2d 1235, 1238 (9th Cir.1982). Rather, there must be specific, admissible evidence identifying the basis for the dispute. Id. The court need not “comb the record” looking for other evidence; it is only required to consider evidence set forth in the moving and opposing papers and the portions of the record cited therein. Fed.R.Civ.P. 56(c)(3); Carmen v. S.F. Unified Sch. Dist., 237 F.3d 1026, 1029 (9th Cir.2001). The Supreme Court has held that “[t]he mere existence of a scintilla of evidence ... will be insufficient; there must be evidence on which the jury could reasonably find for [the opposing party].” Liberty Lobby, 477 U.S. at 252, 106 S.Ct. 2505.

III. FLSA and California Wage Order Exemptions

Defendants claim that class members are not owed overtime because they fall under a number of overtime exemptions; Plaintiffs argue these exemptions are inapplicable.

When the material facts are undisputed, “[t]he question whether [employees’] particular activities excluded them from overtime benefits of the FLSA is a question' of law.” Bratt v. Cnty. of Los Angeles, 912 F.2d 1066, 1068 (9th Cir.1990). An “employer who claims an exemption from the FLSA has the burden of showing that the exemption applies.” Webster v. Pub. Sch. Employees of Washington, Inc., 247 F.3d 910, 914 (9th Cir. 2001) (citing Donovan v. Nekton, Inc., 703 F.2d 1148, 1151 (9th Cir.1983) (per curiam)). The FLSA “is to be liberally construed to apply to the furthest reaches consistent with Congressional direction. To that end, FLSA exemptions are to be narrowly construed against employers and are to be withheld except as to persons plainly and unmistakably within their terms and spirit.” Klem v. County of Santa Clara, 208 F.3d 1085, 1089 (9th Cir.2000) (citations omitted); see also Haro v. City of Los Angeles, 745 F.3d 1249, 1256 (9th Cir.) cert. denied sub nom. City of Los Angeles, Cal. v. Haro, — U.S. -, 135 S.Ct. 138, 190 L.Ed.2d 45 (2014); Webster, 247 F.3d at 914.

Under the FLSA, the minimum wage and maximum hour requirements do not apply to “any employee employed in a bona fide ... administrative, or professional capacity.” 29 U.S.C. § 213(a)(1). Highly compensated employees who regularly perform any of the duties of employees which are exempt under the administrative or professional exemptions are also exempt. 29 C.F.R. § 541.601.

The California Industrial Welfare Commission (“IWC”) “is the state agency empowered to formulate regulations (known as wage orders) governing minimum wages, maximum hours, and overtime pay in the State of California.” Ramirez v. Yosemite Water Co., 20 Cal.4th 785, 795, 85 Cal.Rptr.2d 844, 978 P.2d 2 (1999) (citation omitted). The IWC issues different wage orders for different industries. “The IWC’s wage orders, although at times patterned after federal regulations, also sometimes provide greater protection than is provided under federal law in the Fair Labor Standards Act (FLSA) and accompanying federal regulations.” Id. (citations omitted).

Similar to federal regulations, the Industrial Welfare Commission’s Wage Order 4-2001, 8 Cal.Code Regs. § 11040, which applies to professional, technical, clerical, mechanical, and similar occupations, exempts from California’s overtime requirements, all “persons employed in administrative ... or professional capacities.” California does not have an equivalent highly compensated employee exemption.

Defendants argue that Appraisers fall under: (1) the federal and state administrative exemptions; (2) the federal and state professional exemptions; and (3) the related federal highly-compensated employee exemption. Plaintiffs assert that none of these exemptions apply.

A. Administrative Exemption

1. In General

California and federal law exempt administrative employees from overtime requirements. The FLSA defines an “employee employed in a bona fide administrative capacity” as any employee:

(1) Compensated on a salary or fee basis ...;

(2) Whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

(3) Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

29 C.F.R. § 541.200 (current). Wage Order 4-2001 (“Wage Order”) specifies that the administrative exemption is to be construed according to the specific FLSA regulations operative as of the effective date of the order, 29 C.F.R. § 541.200-.205 (2000). Section 1(A)(2) of the Wage Order contains substantially similar elements as the current federal regulation, despite applying different versions of the FLSA regulations. Rincon v. Am. Fed’n of State, Cnty., & Mun. Employees, 2013 WL 4389460, at *17 (N.D.Cal. Aug. 13, 2013) (The state law test “closely parallels the federal regulatory definition of the same exemption.” (quoting Combs v. Skyriver Commc’ns, Inc., 159 Cal.App.4th 1242, 1255, 72 Cal.Rptr.3d 171 (2008))). Therefore, the Court will consider the state and federal administrative exemptions together.

Application of the administrative exemption turns on the specific duties of the employee(s) in question. Section 541.203 provides a number of examples of positions that are generally exempt or non-exempt under the administrative exemption. For example,

insurance claims adjusters generally meet the duties requirements for the administrative exemption ... if their duties include activities such as interviewing insureds, witnesses and physicians; inspecting property damage; reviewing factual information to prepare damage estimates; evaluating and making recommendations regarding coverage of claims; determining liability and total value of a claim; negotiating settlements; and making recommendations regarding litigation.

29 C.F.R. § 541.203(a).

Employees in the financial services industry also generally meet the duties requirements for the administrative exemption if them duties include work “such as collecting and analyzing information regarding the customer’s- income, assets, investments or debts; determining which financial products best meet the customer’s needs and financial circumstances; advising the customer regarding the advantages and disadvantages of different financial products; and marketing, servicing or promoting the employer’s financial products.” 29 C.F.R. § 541.203(b). The regulation clarifies that the exemption would generally not apply to “an employee whose primary duty is selling financial products.” Id.

Human resources employees may qualify for the exemption. 29 C.F.R. § 541.203(e). Those who “formulate, interpret or implement employment policies and management consultants who study the operations of a business and propose changes in organization generally meet the duties requirements for the administrative exemption.” Id. Those who perform more ministerial roles, however, typically will not qualify for the exemption. For example, “personnel clerks who ‘screen’ applicants to obtain data regarding their minimum qualifications and fitness for employment generally do not meet the duties requirements for the administrative exemption.” Id. These clerks lack discretion. “Such personnel clerks typically will reject all applicants who do not meet minimum standards for the particular job or for employment by the company. The minimum standards are usually set by the exempt human resources manager or other company officials, and the decision to hire from the group of qualified applicants who do meet the minimum standards is similarly made by the exempt human resources manager or other company officials.” Id. However, “when the interviewing and screening functions are performed by the human resources manager or personnel manager who makes the hiring decision or makes recommendations for hiring from the pool of qualified applicants, such duties constitute exempt work, even though routine, because this work is directly and closely related to the employee’s exempt functions.” Id.

In contrast, “[ojrdinary inspection work generally does not meet the duties requirements for the administrative exemption.” 29 C.F.R. § 541.203(g). Because “inspectors normally perform specialized work along standardized lines involving well-established techniques and procedures which may have been catalogued and described in manuals or other sources,” they generally “rely on techniques and skills acquired by special training or experience.” The administrative exemption is inappropriate because, while “[tjhey have some leeway in the performance of their work” it is “only within closely prescribed limits.” Id.

Similarly, “examiners or graders, such as employees that grade lumber, generally do not meet the duties requirements for the administrative exemption.” 29 C.F.R. § 541.203(h). These employees “usually perform work involving the comparison of products with established standards which are frequently catalogued.” Id. The regulations acknowledge that “[ojften, after continued reference to the written standards, or through experience, the employee acquires sufficient knowledge so that reference to written standards is unnecessary.” Id. However, “[t]he substitution of the employee’s memory for a manual of standards does not convert the character of the work performed to exempt work requiring the exercise of discretion and independent judgment.” Id.

Also, “public sector inspectors or investigators of various types, such as fire prevention or safety, building or construction, health or sanitation, environmental or soils specialists and similar employees, generally do not meet the duties requirements for the administrative exemption because their work typically does not involve work directly related to the management or general business operations of the employer.” 29 C.F.R. § 541.203(j). Even though their work may be complex, “[sjuch employees also do not qualify for the administrative exemption because their work involves the use of skills and technical abilities in gathering factual information, applying known standards or prescribed procedures, determining which procedure to follow, or determining whether prescribed standards or criteria are met.” Id.

Courts give deference to the “DOL’s interpretation of its own regulations,” including the examples contained in § 541.203. In re Farmers Ins. Exch., Claims Representatives’ Overtime Pay Litig., 481 F.3d 1119, 1129 (9th Cir.2007). Therefore, in applying the administrative exemption, courts typically consider the regulatory language and compare the examples identified in the regulation to job positions at issue in the litigation. See, e.g., id.

2. Application

The parties agree that Appraisers meet the salary basis requirement for the administrative exemption. Thus, the Court will only analyze the two “duties” prongs of the administrative exemption, taking into account the examples above,

a. Directly Related to Management Policies or General Business Operations

The “directly related” prong has two subparts. Plaintiffs do not contest that Appraisers’ primary duty involves office or non-manual work. Pis. Opp’n at 8. Therefore, the Court concludes that the first subpart of the “directly related” test is satisfied.

The parties dispute whether the second subpart is met. Defendants contend that Appraisers’ work is directly related to LAS or LAS’s clients’ general business operations. Wage Order § 1(A)(2)(a)(1) and (f);' 29 C.F.R. § 541.200. Plaintiffs disagree.

i. Legal Standard

The 2000 DOL regulations explain the “directly related” prong as follows:

(a) The phrase “directly related to management policies or general business operations of his employer or his employer’s customers” describes those types of activities relating to the administrative operations of a business as distinguished from “production” or, in a retail or service establishment, “sales” work....

(b) The administrative operations of the business include the work performed by so-called white-collar employees engaged in “servicing” a business, as, for [] example, advising the management, planning, negotiating, representing the company, purchasing, promoting sales, and business research and control....

(c) As used to describe work of substantial importance to the management or operation of the business, the phrase “directly related to management policies or general business operations” is not limited to persons who participate in the formulation of management policies or in the operation of the business as a whole. Employees whose work is “directly related” to management policies or to general business operations include those [sic] work affects policy or whose responsibility it is to execute or carry it out. The phrase also includes a wide variety of persons who either carry out major assignments in conducting the operations of the business, or whose work affects business operations to' a substantial degree, even though their assignments are tasks related to the operation of a particular segment of the business.

29 C.F.R. § 541.205 (2000). The California law specifies that its administrative exemption be construed according to the federal regulation operative at the time it went into effect in 2001. Wage Order § 1(A)(2)(a)(1).

The current DOL regulations, effective since 2004, are substantially similar:

(a) To qualify for the administrative exemption, an employee’s primary duty must be the performance of work directly related to the management or general business operations of the employer or the employer’s customers. The phrase “directly related to the management or general business operations” refers to the type of work performed by the employee. To meet this requirement, an employee must, perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment.

(b) Work directly related to management or general business operations includes, but is not limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources;. employee benefits; labor relations; public relations, government relations; computer network, internet and database administration; legal and regulatory compliance; and similar activities. Some of these activities may be performed by employees who also would qualify for another exemption.

(c) An employee may qualify for the administrative exemption if the employee’s primary duty is the performance of work directly related to the management or general business operations of the employer’s customers. Thus, for example, employees acting as advisers or consultants to their employer’s clients or customers (as tax experts or financial consultants, for example) may be exempt.

29 C.F.R. § 541.201 (current).

Therefore, in assessing the application of this prong of the administrative exemption, courts consider the employees’ primary duty and determine whether it relates to “assisting with the running or servicing of the business.” Id. The so-called production/administrative dichotomy may be helpful in making this determination. Webster, 247 F.3d at 916. “The administration/production distinction ... distinguishes between work related to the goods and services which constitute the business’ marketplace offerings and work which contributes to ‘running the business itself.’ ” Bothell v. Phase Metrics, Inc., 299 F.3d 1120, 1127 (9th Cir.2002) (quoting Bratt, 912 F.2d at 1070).

ii. Analysis

The parties disagree about the applicability of the second element of the administrative exemption, which requires the employee’s work be directly related to the management or general business operations of the employer or the employer’s customers. Defendants raise three arguments as to why they believe Appraisers’ primary duty is directly related to the management or general business operations of the employer or the employer’s customers. First, they argue that Appraisers are essentially “advisers” to LAS and BofA. Second, they argue that Appraisers’ reports are essentially “business research” guiding the policies of LAS or BofA. Third, they argue that Appraisers are the “representatives of LAS” who are presented to LAS’s customers and the public.

Plaintiffs, on the other hand, argue that Appraisers are essentially engaged in the production work of LAS — generating appraisals. They note that Appraisers do not impact policy decisions of LAS or BofA or the direction of the business. Also, as Appraisers are not in contact with loan officers or borrowers, they do not “represent” the company or BofA to the public.

The Court agrees with Plaintiffs.

Defendants explain that “LAS’s customers are mortgage lenders” who rely on the Appraisers’ “expert advice and opinions” in making lending decisions. Def. Mot. at 9-10. Therefore, they argue this “advisory and consulting service” amounts to assisting with the running or servicing of the business itself. Id.

The Court disagrees that Appraisers engage in advisory and consulting services, consistent with 29 C.F.R. §§ 541.201(c) (current) and 541.205(c) (2000). The language of the regulation and case law make clear that “advisory and consulting services” is inapplicable to employees who are engaged in the core, day-to-day business of the employers.

First, the current regulations identify “tax experts or financial consultants” as the type of advisers envisioned by the regulation. 29 C.F.R. § 541.201(c) (current). Tax and financial consulting is a form of specialized expertise meant to guide the policies of a business.

Similarly, the Ninth Circuit has concluded, “ ‘advising the management’ as used in [§ 541.205] is directed at advice on matters that involve policy determinations, i.e., how a business should be run or run more efficiently, not merely providing information in the course of the customer’s daily business operation.” Bratt, 912 F.2d at 1070. LAS’s Appraisers collectively generate thousands of reports a month; each individual Appraiser generates two reports a day, on average. Their work is integrated into the day-to-day core product and constitutes the essential service offered by LAS — real estate appraisals. Therefore, “the work of the [Appraisers] primarily involves the day-to-day carrying out of [LAS’s and BofA’s business] affairs, rather than running the business itself or determining its overall course or policies.” Id. Therefore, the Appraisers do not act as a consultants or advisers for the purposes of the administrative exemption.

Defendants also argue that Appraisers perform “business research” which is covered by the state and federal administrative exemption. 29 C.F.R. § 541.205(b) (2000). Defendants point to the fact that Appraisers gather and analyze data to provide their opinions of the fair market value of properties for LAS’s customers. The 2000 regulation provided: “The administrative operations of the business include the work performed by so-called white-collar employees engaged in ‘servicing’ a business as, for, example, advising the management, planning, negotiating, representing the company, purchasing, promoting sales, and business research and control.” 29 C.F.R. § 541.205(b) (2000).

To support their argument that conducting research constitutes an exempt activity, Defendants cite to this Court’s decision in Reber v. AIMCO/Bethesda Holdings, Inc., 2008 WL 4384147, at *5 (C.D.Cal. Aug. 25, 2008). In finding that a genuine issue of fact existed as to whether plaintiffs work as a director of construction fell under the administrative exemption, the Court concluded that “employees that engage in detailed analysis of facts and their import, or high-level planning and implementation are considered administrative.” Id. (citing 29 C.F.R. § 541.203(a)-(c)).

In proposing this general statement, the Court considered three of the examples contained in § 541.203 of positions that are presumptively exempt: (1) insurance claims adjusters; (2) employees in the financial services industry; and (3) an employee who leads a team of other employees to complete major projects. As subsection (3) is clearly inapplicable because Appraisérs do not supervise anyone or lead other employees, the Court will look to whether the positions of claims adjusters or those in the financial services industry are analogous to the positions of Appraisers. Both positions are clearly distinguishable. The regulations provide that these positions are presumptively exempt given a number of determinative factors, which include both the analysis of factual information in addition to broader representation of the company. For example, claims adjusters may be exempt where they negotiate settlements with insurance policy holders and make recommendations regarding litigation on behalf of their employer. Likewise, financial services employees are typically exempt where they directly advise customers regarding the advantages and disadvantages of different financial products and “market[], servic[e] or promot[e] the employer’s financial products.” Id.

Therefore, review of these examples demonstrate that analysis of facts and making conclusions is not in itself sufficient to render an employee exempt; there must also be an application of those facts to the employer’s or customer’s general business operations, such that the employee can be said to be “servicing” the business. Appraisers’ duties, producing real estate appraisals, do not mirror the characteristics of claims adjusters and financial services workers who exercise direct control and input over the direction of the business or meaningful and varied business decisions. In that way, Appraisers are more similar to public sector inspectors or investigators. Even though these positions require the detailed analysis of facts, they “generally do not meet the duties requirements for the administrative exemption because their work typically does not involve work directly related to the management or general business operations of the employer.” 29 C.F.R. § 541.203(j). Appraisers are not exempt as employees who primarily engage in “business research,” as the research and analysis of facts that Appraisers conduct is not related to the servicing of LAS’s or BofA’s business.

Defendants also cite to Reyes v. Hollywood Woodwork, Inc., 360 F.Supp.2d 1288, 1292 (S.D.Fla.2005), for the proposition that conducting research qualifies employees for the administrative exemption. In Reyes, the court applied the production/“general business operations” dichotomy to analyze whether plaintiff fell under the administrative exemption. The court looked to the scope of the employee plaintiffs activities, and concluded those activities were limited to preparing bids which promoted and planned sales while the employer defendant was in the business of selling and producing woodwork. The Court held “as a matter of law, that the preparation of the bids is not sales or production work, but rather is an important part of general business operations necessary for the Defendants to obtain production work and sell their products.” Id. at 1292.

Reyes is distinguishable. LAS is in the business of generating appraisal reports. Appraisers perform the investigations and provide the analysis necessary to generate the market valuations of the residential properties. Therefore, rather than involve the “general business operations” of LAS, the preparation of appraisal reports constitutes the “production work” of LAS. In coming to this conclusion,' the Court acknowledges that preparing the appraisal reports requires a great deal of skill and the application of expertise. Nevertheless, this does not change the fact that the appraisal reports were, at core, the “product” that was delivered by LAS to BofA. In that sense, Appraisers were not servicing LAS’s business through “business research,” the generation of their reports. Rather, the reports themselves constituted LAS’s business.

Defendants also contend that Appraisers “represent” LAS to its customers through their appraisals, and therefore are involved in servicing the business. 29 C.F.R. § 541.205(b) (2000). “Appraisers’ independent opinion becomes LAS’s official valuation of a property, and becomes part of a loan package for the life of a loan, even if it is subsequently sold.” Def. Mot. at 11. Therefore, any mistakes in the appraisals may subject the loan seller to liability, including repurchasing the loan. Id. Defendants maintain that Appraisers are thus the “representative[s] of LAS that it presents to its customers.” Id.

To support this position, Defendants argue that- appraisers are analogous to claims adjusters. Most courts considering the job duties of insurance claims adjusters conclude that they are exempt under the administrative exemption. For example, the Seventh Circuit in Roe-Midgett v. CC Servs., Inc., 512 F.3d 865, 871 (7th Cir.2008), concluded that plaintiff, a material damage appraiser (“MDA”) for an insurance company, was an exempt administrative employee. MDAs “[we]re responsible for investigating auto accident damage, making repair or replacement determinations, drafting estimates, and settling claims of up to $12,000 where liability has been established and coverage approved.” Id. at 868. The court considered the fact that “[MDAs] spend most of their'time in the field and represent the ‘face’ of [employer] CCS to the claimants and mechanics with whom they interact.” Id. at 871. “CCS’s customers [we]re insurance companies in the business of selling policies, and employees who processed] claims against those policies [we]re performing an administrative function for CCS’s customers (i.e., a task that administer[ed] the policies ‘produced’ by the insurers).” Id. at 872. So, in RoeMidgett, the customer (insurance company) actually produced the end product (the insurance policy) that the employee administered. The insurance policy was sold to outside insureds, and the MDA’s duties involved contact with these claimants and third-party mechanics, thus becoming the face of the insurance company.

In the present case, LAS generates appraisals and BofA issues loans. Unlike the MDAs in Roe-Midgett, the Appraisers do not administer the product generated by BofA (the mortgage loan), nor do they have contact with the end “consumer” of BofA’s product or any third party outside of the corporate family. Indeed, while BofA receives LAS’s product (the appraisals), the Appraisers themselves have no or little contact with BofA. The appraisals become a component part of the end product that enters the market. LAS’s product (appraisal reports) — not the Appraiser — is presented to the public. Defendants’ argument that Appraisers themselves represent the company therefore falls short. Mot. at 12 (“As Appraisers’ stated opinion of the value of a property is held out to the public, and Appraisers may be called upon to defend these opinions on behalf of LAS or its customers [BofA], Appraisers necessarily ‘represent’ ... both LAS and, potentially, LAS’s customers.”). In light of the nature of LAS and BofA’s business, Appraisers are not the “face” of LAS or BofA, and do not therefore “represent” LAS or LAS’s customers.

Likewise, Rincon, cited by the Defendants, is clearly distinguishable. In finding that plaintiff, a union organizer, was an exempt administrative employee, the court looked to the plaintiffs extensive contacts with third parties. “[Plaintiffs] primary duty as an Organizer was to represent and promote [the union]. [Plaintiffs] activities focused on increasing [the union’s] membership and, through that, its bargaining strength. As an Organizer, [plaintiff] was sent out into the community to speak with employees about [the union].” Rincon, 2013 WL 4389460, at *19. In contrast, here, Appraisers do not “represent and promote” LAS or BofA — and, in fact, have little to no contact with third-parties. Indeed, it is the appraisal report, not the Appraiser, that is presented to BofA, and eventually passed on to a borrower as part of a loan package. This case does not support a conclusion that Appraisers duties relate to “running and servicing” LAS’s business.

Appraisers’ work does not involve “tax; finance; accounting; budgeting;- auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations, government relations; computer network, internet and database administration; [or] legal and regulatory compliance.” 29 C.F.R. § 541.201(b) (current). In oral arguments, Defendants contended that Appraisers’ work is “functionally similar” to these activities, but failed to articulate specifically how the job duties of Appraisers actually align with the job duties of those involved in budgeting, auditing, compliance, finance, or procurement. The fact that their work “touches on” job duties of those in these fields is insufficient to trigger the exemption. See Klem, 208 F.3d at 1089 (“FLSA exemptions are to be narrowly construed against employers and are .to be withheld except as to persons plainly and unmistakably within their terms and spirit.”).

The Court finds that Appraisers’ work is best understood as production work. LAS’s primary business is generating appraisal reports: While Appraisers’ duties involve analytical thinking to generate a valuation and complete a report, in the end, Appraisers present a piece of LAS’s primary product: a report detailing an opinion as to the market value of a piece of real estate and the written support for that opinion. Appraisers are not evaluated for their interpersonal skills or their ability to drum up business for LAS or BofA; they are assessed based upon the.number and quality of reports that they generate. Appraisers do not generally provide advice on matters that involve policy determinations how a business should be run or run more efficiently.” Bratt, 912 F.2d at 1070. Appraisers produce one piece of data that BofA takes into account when making lending decisions. Appraisers do not provide general research on LAS or BofA’s business' — for example, by providing research on the efficacy of appraisal techniques.

The undisputed facts establish, therefore, that Appraisers are not “servicing” the business.. Appraisers are more like production workers than administrative workers. Thus, the Court concludes Appraisers’ work is not directly related to LAS or LAS’s clients’ general business operations, under either the California or federal standard.

Defendants have not met their burden of demonstrating that Appraisers’ work directly relates to management policies or general business operations of LAS or BofA. Wage Order § 1(A)(2); 29 C.F.R. § 541.200. Plaintiffs have met them burden in establishing that the undisputed facts show that the exemption is not applicable. Therefore, the Court finds that Appraisers do not fall under the federal or state administrative exemption, and summary judgment as to this issue is appropriate.

b. Discretion and Independent Judgment with Regards to Matters of Significance

As Defendants’ have not met the “directly related” prong of the test, the administrative exemption is not applicable. Nevertheless, the Court will consider the final prong of the test, whether Appraisers exercised discretion and independent judgment with regards to matters of significance. 29 C.F.R. § 541.207 (2000); 29 C.F.R. § 541.202 (current).

i. Legal Standard

This test has two related parts. First, courts look to whether an employee exercised any discretion and independent judgment. If so, courts must consider whether that discretion and independent judgment was exercised with regards to or in relation to matters of significance.

The first part of the test is the exercise of discretion and independent judgment. The exercise of discretion and independent judgment involves “the comparison and evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered.” 29 C.F.R. § 541.207 (2000); 29 C.F.R. § 541.202(a) (current); Bothell, 299 F.3d at 1129 (“The requirement that the employee ‘customarily and regularly exercise [ ] discretion and independent judgment’ is satisfied if the employee has the ability to compare, evaluate, and choose from possible courses of conduct.” (quoting 29 C.F.R. § 541.207(a) (2000))).

The second part of the test assesses the context of that discretion and independent judgment. The exercise of discretion and independent judgment must be “free from immediate direction” and relate to work that is of “substantial importance” or with regards to “matters of significance.” Id.; see also 29 C.F.R. § 541.202(a), (c). Although the California regulations and the current FLSA regulations use slightly different terms, the DOL has explained that the two phrases “describe the same general concept — that the work performed by an exempt administrative employee must be significant, substantial, important, or of consequence to an employer or the employer’s customers.” Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees (“Final Rule”), 69 Fed.Reg. 22,122-01, 22,143 (Apr. 23, 2004) (to be codified at 29 C.F.R. pt. 541). The Ninth Circuit has clarified that courts must assess not only whether an employee exercised discretion over decisions, but “the importance of the decisions over which [the employee] had control.” Bothell, 299 F.3d at 1129.

The Ninth Circuit has recognized that the issue of “substantial importance” may be difficult to resolve. Campbell v. PricewaterhouseCoopers, LLP, 642 F.3d 820, 832 (9th Cir.2011).

The former federal regulations incorporated by the administrative exemption include several examples of administratively exempt white-collar employees, including tax consultants, wage-rate analysts, analytical statisticians, claim agents, and “many others.” 29 C.F.R. § 541.205(c)(3), (5). In contrast, the examples of non-exempt employees are predominately clerical — -bookkeepers, secretaries, messengers, and other “clerks of various kinds.” Id. § 541.205(c)(1)-(2).

Id.

The regulation provides that “[t]he phrase ‘discretion and independent judgment’ must be applied in the light of all the facts involved in the particular employment situation in which the question arises.” 29 C.F.R. § 541.202 (current). It provides a number of factors to consider when determining whether an employee exercises discretion and independent judgment with respect to matters of significance including, but not limited to:

(i)whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices;

(ii) whether the employee carries out major assignments in conducting the operations of the business;

(iii) whether the employee performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to operation of a particular segment of the business;

(iv) whether the employee has authority to commit the employer in matters that have significant financial impact;

(v) whether the employee has authority to waive or deviate from established policies and procedures without prior approval;

(vi) whether the employee has authority to negotiate and bind the company on significant matters;

(vii) whether the employee provides consultation or expert advice to management;

(viii) whether the employee is involved in planning long- or short-term business objectives;

(ix) whether the employee investigates and resolves matters of significance on behalf of management;

(x) and whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances.

29 C.F.R. § 541.202(b).

“Federal courts generally find that employees who meet at least two or three of these factors are exercising discretion and independent judgment, although a case-by-case analysis is required.” Final Rule, 69 Fed.Reg. at 22,143.

ii. Analysis

Defendants claim that Appraisers regularly exercise discretion and independent judgment. The thrust of the “discretion and independent judgment” that Defendants point to is in Appraisers’ ability to conduct appraisals how they see fit. For example, Defendants note that Appraisers must determine which variables to consider, which comparables to use, and how to adjust a valuation based on the data they gather.

Plaintiffs focus on the narrow constraints within which appraisers operate. While Appraisers have some discretion over comparables, they also must usually select comparables within very specific guidelines. Additionally, Plaintiffs point to the specific standards guiding Appraisers, and limiting the factors that they can consider in coming to their determinations about the valuation of real estate. Most notably, Plaintiffs highlight the form Appraisers use to write up their .appraisals. Each factor Appraisers must consider is specifically laid out, Plaintiffs suggest, with little room for independent discretion or judgment.

First, as to whether- discretion and independent judgment existed, the Court finds an analogy to a simpler appraiser position to be helpful. In assessing the job of an automobile damage appraiser, one court described the job as follows:

The handbook states that the essence of an appraiser’s job is “the determination of facts, and in making their estimates they are guided primarily by