United States: Sheppard Mullin Secures Major Victory For Chipotle In Nationwide Misclassification Action By Demonstrating Variations Among Proposed Class Members

The Court's opinion in Scott v. Chipotle Mexican Grill demonstrates how employers can successfully combat class action claims that employees were misclassified as exempt. The successful defense of the class certification motion relied chiefly on deposition and declaration testimony to highlight inconsistencies, variations, and individualized inquiries that prevented resolution of the claims at issue on a class-wide basis.

On behalf of their client, Chipotle Mexican Grill, Inc., Sheppard Mullin and Messner Reeves defeated certification of six separate classes involving allegations that the job position of "Apprentice" was misclassified as exempt for purposes of paying overtime wages. They also successfully moved to decertify a collective action under the Fair Labor Standards Act ("FLSA") involving the same claims for 516 opt-in Apprentices nationwide. The case was brought by seven individuals who had worked as Apprentices in various Chipotle stores. The named plaintiffs worked in six states while the opt-in plaintiffs worked in 37 states. Chipotle considers the Apprentice position a salaried, management-level position and classified the position as exempt. The plaintiffs in the lawsuit claimed that they, and the other Apprentices employed in their respective states, perform insufficient managerial work and that, as a result, all of these Apprentices were misclassified as exempt entitling them to overtime wages.

In order to successfully certify the six state-law classes of Apprentices, the plaintiffs were required to demonstrate that questions of law or fact were common to the Apprentices who they sought to represent and that a class action was the superior method to adjudicate their claims. Through plaintiffs' own deposition testimony, deposition testimony from numerous other Apprentices, and declaration testimony, Sheppard Mullin demonstrated to the Court that individualized inquiries as to each Apprentice's authority and job duties were necessary to determine if the exempt classification was appropriate. Thus, there was no common proof and class adjudication was inappropriate.

Indeed, during the various plaintiff depositions, Sheppard Mullin was able to catch the Apprentices taking conflicting positions. For instance, one plaintiff testified that he did not have any say in hiring employees, developing employees or setting work schedules. However, that very same plaintiff then admitted that he did engage in hiring, evaluating employee performance and scheduling. Another plaintiff testified that she spent the majority of her time on the floor making food. However, that same plaintiff testified that she was "running a good store" as an Apprentice, was involved in marketing, made hiring recommendations, drafted schedules and assisted with her store's budget. Similar conflicts surfaced in the testimony of other plaintiffs as well as many of the opt-in plaintiffs that showed they were not similarly situated. These inconsistent accounts by the plaintiff and opt-ins demonstrated that Apprentices performed their duties in dissimilar ways and had varied authority that required individual, rather than collective analysis.

The Court also noted that differences in the structure of Chipotle locations, sales volume and managerial style also affected the amount of time Apprentices spent engaged in exempt managerial and administrative duties. Some locations have a General Manager or other management-level employee who is responsible for one or more stores that impacts the level of decision-making of an Apprentice at the same location. Yet, other locations have no such positions and are managed solely by Apprentices. Moreover, locations with higher sales volumes tend to have larger staffs. Apprentices at those locations engaged in more managerial activities such as hiring, discipline, training and supervision than Apprentices at stores with lower sales volumes. Because this too factors into whether and to what extent any individual Apprentice was engaged in exempt job duties, the Court concluded that proof of the Apprentices' claims would not overlap and, thus, does not meet the class certification standard regarding common questions of law or fact.

As for the FLSA collective action, 516 Apprentices opted-in to join with the plaintiffs in their claims. In order to determine whether such a collective action could be maintained, the Court had to decide whether those Apprentices who opted-in were similarly situated to the plaintiffs. This included a consideration of disparate factual and employment settings of individual plaintiffs, Chipotle's defenses, and procedural fairness. With respect to the disparate employment settings, the Court once again acknowledged the different levels and amount of authority each Apprentice might have in exercising tasks. The Court also observed that such disparities in job duties would permeate the job position because the 516 opt-ins came from 37 states and covered nine geographic regions. Such disparities were highlighted, in part, by the deposition testimony of an Apprentice who worked in two different states and testified to vastly different experiences engaging in management-level duties in those states.

Chipotle also asserted affirmative defenses arguing that some Apprentices were exempt under the "executive" exemption and others were exempt under a combination of the "executive" exemption and "administrative" exemption. Because of the inconsistencies in the testimony of plaintiffs as well as the testimony from the opt-in plaintiffs, the Court determined that it would be difficult for Chipotle to rely on "representative proof" in asserting these defenses. The Court opined that, to find otherwise would reduce the similarly situated requirement "to a mere requirement that plaintiffs share an employer, a job title, and a professed entitlement to additional wages." Because such a standard falls far below what is required, the Court determined that the FLSA collective action that was conditionally certified in 2013 could not be maintained and granted Chipotle's motion to decertify the collective action.

It is apparent from the Court's opinion that the testimony presented was given significant weight in making its determination. Thus, employers who are able to highlight variations in job duties that are determinative of exempt status and articulate the necessity for individualized inquiries in misclassification cases should have a better chance of persuading a judge that class and collective certification is not appropriate.

Richard J. Simmons, Daniel J. McQueen, Brian D. Murphy and Lisa M. Lewis represented Chipotle in this matter.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
13 Sep 2018, Other, Los Angeles, United States

Liisa will be giving opening remarks and presenting, "Big Data and Online Behavioral Advertising (OBA): An Advertiser’s Perspective Origins of big data and how to legally acquire data."

26 Sep 2018, Seminar, San Francisco, United States

Please join us for Sheppard Mullin's Labor & Employment Law Update & Happy Hour Seminar Series.

28 Sep 2018, Other, Los Angeles, United States

Leaders today don't just have to worry about nefarious cybercriminals getting "inside" their firewalls; there's an entire ecosystem of SAAS partners, third party vendors and suppliers, and all the hardware from switches to POS terminals that need to be monitored.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions