Category: Wage & Hour Litigation

By Gerald L. Maatman, Jr., Gregory Tsonis, and Christian J. Palacios

Duane Morris Takeaways:  On August 22, 2025, U.S. District Judge Matthew Kennelley for the Northern District of Illinois ruled that a group of supermarket meat, bakery, and deli managers could maintain their collective action against the grocery chain, Mariano’s, despite the differences in job responsibilities and store locations of collective action members. In the same order, Judge Kennelley denied Plaintiffs’ motion to certify a proposed class pursuant to Rule 23, highlighting the more demanding requirements for class certification. The case, captioned Depyper, et al. v. Roundy’s Supermarkets, Inc. et al., Case No. 20-C-2317 (N.D. Ill. Aug. 22, 2025) and available here, is significant because it is one of the first times a court considers a defendant’s “decertification” motion following the Seventh Circuit Court of Appeals decision in Richards, et al. v. Eli Lilly & Co., Case No. 24-2574, 2025 WL 221850 (7th Cir. Aug. 5, 2025), (“Eli Lilly”), which addressed the standard applicable for conditionally certifying an FLSA collective action. As this decision illustrates, although plaintiffs may face a higher legal bar for sending notice to a purported collective post-Eli Lilly, maintaining the collective after it has been “conditionally certified” is still subject to a much less demanding analysis than under Rule 23.

Background

Mariano’s and its banner store, Roundy’s Supermarkets, Inc. (“Defendant”), a well-known grocery store chain in the state of Illinois, was sued on April 14, 2020, by a former meat manager and bakery manager, alleging violations of the Fair Labor Standards Act (“FLSA”) and the Illinois Minimum Wage Law (“IMWL”), seeking unpaid overtime wages and alleging they were misclassified as exempt under both laws. Two years later, on April 21, 2022, a former deli manager filed a similar lawsuit alleging similar violations on behalf of her and other similarly situated deli managers. Id. The first lawsuit was “conditionally certified” on November 9, 2020, and Defendant stipulated to conditional certification in the second action on June 14, 2022.

Following the close of the lawsuits’ respective notice periods, the first collective action (comprised of meat managers and bakery managers) numbered twenty-eight (28) plaintiffs, while the second collective action (comprised of deli managers and hot foods managers) contained seventy-six (76) plaintiffs. Id. The parties consolidated the actions shortly thereafter to streamline discovery. Id.

After the close of discovery, Plaintiffs moved for “final certification” of the FLSA collective and concurrently moved to certify a IMWL class under Rule 23 comprised of all Mariano’s deli, hot foods, bakery, and/or meat department managers which were paid a weekly salary and classified as exempt, within the statutory period. Id. at 5. In response, Defendant moved to “decertify” both collectives. Id.

The Court’s Ruling

In a lengthy, 39-page opinion, the Court denied Plaintiffs’ motion for class certification under Rule 23 while simultaneously granting Plaintiffs’ motion for collective action certification (thus denying Defendant’s decertification motion).

The Court considered Plaintiffs’ class certification motion first, holding that while Plaintiffs established a common question (i.e. whether Defendant maintained an unofficial policy of misclassifying department managers), they did not establish that common issues predominated over individual issues. Id. at 10-11.  As Defendant maintained that it properly classified Plaintiffs as exempt from the FLSA under the Administrative or Executive exemptions, the Court determined that individualized inquiries would be required to establish whether exempt work was the primary duty of an employee.  Id. at 14.  Thus, even though proving an unofficial policy “will move the plaintiffs’ claims forward,” the factfinder would still have to determine whether that policy resulted in a department manager having non-exempt primary duties.  Id.  Notably, the Court also credited various declarations provided by Defendant from department managers that indicated a wide range of “supervisory responsibility,” thus requiring further individualized inquiries regarding satisfaction of the discretion and independent judgment necessary to establish the Administrative exemption, further precluding predominance.  Id. at 15-16.  Finally, the Court also denied Plaintiffs’ fallback argument for “issue-class certification” under Rule 23(c)(4), similarly reasoning that even isolating the alleged misclassification policy as a common issue would not materially advance the litigation, given liability still turned on an individualized analysis of plaintiffs’ primary duties. Id. at 19.

With respect to Plaintiffs’ motion for FLSA collective action certification, the Court’s analysis and conclusion differed markedly. The Court first noted that FLSA collective actions do not have the same requirements as Rule 23 class actions and, unlike Rule 23, nothing in the FLSA required “adequate representation,” establishing predominance, or proving the superiority of proceeding as a collective. Id. at 21. Notably, the Court first analyzed and considered the Seventh Circuit Court of Appeals’ recent decision in Eli Lilly, which revised the standard for granting conditional certification of an FLSA collective, and its consequence on the instant action. As the Court noted, although Eli Lilly provided some guidance on the “notice” stage of an FLSA collective action, once opt-in discovery concluded, Plaintiffs bore the burden of establishing that they were similarity situated at the final certification stage by a preponderance of evidence. Id. at 23. The Court also noted that Eli Lilly was silent on the standard that district courts should apply to determine whether the collective contains “similarly situated” employees. Id. at 23.

Given the lack of guidance from the Seventh Circuit, the Court applied a three-factor test adopted by district courts in Illinois and elsewhere, which considers: “(1) whether the plaintiffs share similar or disparate factual and employment settings; (2) whether the various affirmative defenses available to the defendant would have to be individually applied to each plaintiff; and (3) fairness and procedural concerns.” Id. at 23.

Applying these factors, the Court determined that plaintiffs met their burden and could maintain both collectives. Specifically, the Court found that the collective members uniformly testified that they were classified as exempt, constrained by upper-level management hierarchy, expected to work 50 hours per week, and often performed the same tasks as hourly employees. Id. at 28. Though Defendant attempted to point to dissimilarities between Plaintiffs’ testimony and the department manager job descriptions, the Court noted that this argument “does not show a difference among the plaintiffs,” concluding that “[t]he fact that the plaintiffs uniformly testified that their job descriptions did not accurately reflect their actual work is a similarity among them, not a difference.”  Id.  The Court further rejected Defendant’s argument that managers’ job responsibilities varied across locations, noting that the fact that Mariano’s had forty-four (44) locations was not dispositive.  Id. at 27.   Defendant did not demonstrate how each store was different from the others, the Court opined, further noting that Defendant itself thought store location was “immaterial” when classifying department managers as exempt. Id. at 27-28. Accordingly, the Court certified the twenty-eight (28) collective action of meat and bakery managers and the seventy-six (76) collective action of deli and hot foods managers.

Takeaway for Employers

This decision highlights the relatively lenient standard applicable to FLSA collective actions, as opposed to Rule 23 class actions.  Significant variation among job duties, titles, and responsibilities may not be enough to defeat collective action certification, and Employers should formulate an aggressive strategy for obtaining record evidence of substantial dissimilarities to prevail at the decertification stage. The Depyper decision also demonstrates that, while the Seventh Circuit has weighed in on the notice requirement for conditional certification, district courts retain substantial discretion in deciding what standard to apply at the “decertification” stage in assessing whether FLSA collective action members are “similarly situated.”  Ultimately, even where employers prevail against Rule 23 class claims, they can still face costly and broad FLSA collective action litigation on wage and hour claims.

By Gerald L. Maatman, Jr., Eden E. Anderson, and Caitlin Capriotti

Duane Morris Takeaways: On September 4, 2025, the Washington Supreme Court issued its highly anticipated decision in Branson, et al. v. Washington Fine Wine & Spirits, LLC, et al., Case No. 103394-0 (Wash. Sept. 4, 2025), holding that job applicants are not required to prove they are a “bona fide” or a “good faith” applicant to obtain remedies under the EPOA in class action litigation.  The Washington Supreme Court acknowledged, but declined to address, other open issues under the EPOA, which means that state and federal courts in Washington will now be called upon to rule on other unresolved issues under the statute, including whether the EPOA even grants a private right of action to applicants in the first instance. 

Case Background

Washington state’s Equal Pay and Opportunities Act (“EPOA”) was amended in 2022 to require employers to include wage or salary range information in job postings.  Soon thereafter, a torrent of class action lawsuits followed, some filed by applicants who had legitimately sought employment, but far more filed by serial plaintiffs seeking recovery of staggering amounts of statutory damages and attorneys’ fees.  Before it was further amended in 2025, the EPOA provided for $5,000 in statutory damages per job applicant. 

Plaintiffs Lisa Branson and Cherie Burke submitted applications for retail positions with defendant and the job postings to which they applied did not contain the required salary or wage range information.  Branson interviewed for the position for which she applied and discussed pay during that interview, but did not accept the position she was offered. 

Subsequently, Branson and Burke filed a class action lawsuit invoking their right to statutory damages under the EPOA.  Although Branson seemingly was a bona fide job applicant, the defendant filed a motion to bifurcate discovery, arguing that plaintiffs were not the type of “job applicants” the EPOA was intended to protect and that the statute only applies to “bona fide” applicants.  The U.S. District Court for the Western District of Washington certified the following question: “What must a Plaintiff prove to be deemed a ‘job applicant’” under the EPOA?  The Washington Supreme Court accepted certification to resolve that question.  

The Decision

Relying first on the dictionary definition of “applicant,” as “one who applies for something,” the Supreme Court noted that the definition does not rely on the subjective intent of the individual to determine whether a person is an applicant.  Thus, the plain meaning of the term means only “one who applies” irrespective of their intent in doing so.  The Supreme Court noted that elsewhere in the EPOA the legislature used the phrase “bone fide,” but it did not do so in reference to job applicants, further confirming no such limitation. 

The Supreme Court also found telling the fact that the legislature originally considered conferring remedies broadly to “individuals,” but then amended the statute to confer remedies on applicants and employees, suggesting the legislature specifically considered who could obtain remedies and yet did not include any further words of limitation such as “bona fide.”  Additionally, the Supreme Court highlighted that although the agency charged with adopting rules implementing the statute, Labor & Industries, originally promulgated draft rules which defined a job applicant as a “good faith” applicant, that definition was withdrawn and never implemented. 

The Supreme Court repeatedly noted in the decision that, if the EPOA is to be limited to bona fide or good faith job applicants, the Washington legislature will need to act to make this change. 

Three of the nine justices issued a sharply worded dissent disagreeing with the majority’s ruling and expressing their view that the EPOA was not designed to “give bounty seekers an incentive to trawl the internet for noncompliant job postings to obtain a statutory damages award unrelated to any personal harm.”  Dissenting Opinion, at 2.

Although the outcome is not what employers were hoping for, there are silver linings in the Branson decision and, in particular, in the Supreme Court’s numerous footnotes.  Principally, although it declined to rule on the issue because the argument was not made by the defendant, the Supreme Court chose to highlight in footnote 3 that the EPOA may only confer a private right of action on employers, and limit applicants to filing claims with Labor and Industries.  The Supreme Court also chose to emphasize another argument made in amicus briefing in footnote 6 of the decision wherein it highlighted that the remedies available under the EPOA may be too severe and unconstitutional.  It declined to rule on that issue too as it also was not an argument made by the defendant.  Thus, these issues and many others remain unresolved and may soon be addressed by Washington state and federal courts as the legions of EPOA cases, all stayed pending the Branson ruling, are now litigated. 

Implications of the Decision:

The Branson decision is an unfortunate ruling for Washington state employers.  An unharmed plaintiff who never had any legitimate interest in a posted job position and whose only goal is to collect money through legal proceedings now has the green light to seek remedies under the EPOA.  That said, the Branson decision highlights other defense arguments that can and should be made in all pending EPOA cases.  The decision suggests that a private right of action is limited to employees, and that applicants can only seek remedies under the EPOA through administrative proceedings before Labor & Industries. 

By Gerald L. Maatman, Jr., Anna Sheridan, and Ryan T. Garippo

Duane Morris Takeaways: On August 22, 2025, in Shamburg, et al. v. Ayvaz Pizza, LLC, et al., No. 24-CV-00098, 2025 WL 2431652 (W.D. Va. Aug. 22, 2025), Judge Jasmine Yoon of the U.S. District Court for the Western District of Virginia partially dismissed a proposed nationwide collective action brought by pizza delivery drivers.  Although Plaintiff Chandler Shamburg (“Plaintiff” or “Shamburg”), and other plaintiffs, asserted nationwide Fair Labor Standards Act (“FLSA”) and state law claims from multiple jurisdictions, the Court dismissed nearly all of them for lack of personal jurisdiction. This ruling reinforces the growing trend of federal courts willing to apply the Due Process Clause’s protections to expansive FLSA collective actions and underscores the difficulty plaintiffs face in keeping sprawling, multi-state, wage claims altogether in one federal court.

Case Background

In 2024, Shamburg filed a putative class and collective action that alleged that Ayvaz Pizza (“Ayvaz”), a franchisee that “operates an unidentified number of Pizza Hut Franchise Stores within” Virginia, that is neither incorporated in nor has its principal place of business in Virginia, violated the FLSA and various state laws.  Id. at *1.  They also sued Ayvaz’s owner, Shoukat Dhanani, for this conduct as well.  Id.

Shamburg (and, ultimately several other plaintiffs) alleged that both himself, and other drivers, were “required to use their own cars, ensure their cars were legally compliant, pay car-related costs including gasoline expenses, maintenance and part costs, insurance, financing charges, and licensing and registration costs, pay storage costs, cell phone costs, and data charges, and pay for other necessary equipment.”  Id.  As a result, Shamburg and the out-of-state plaintiffs alleged that their hourly rate of pay dropped below the FLSA’s minimum wage guarantee because these expenses were “kicked back” to Ayvaz.  Id. at *1-2.  They also brought seventeen state law claims that “assert causes of action from seven different states and invoke both state statutory and common law.”  Id. at *8.

But, Ayvaz was no stranger to these issues.  It was also recently sued in Garza, et al. v. Ayvaz Pizza, LLC, No. 23-CV-01379 (S.D. Tex.), and Stotesbery, et al. v. Muy Pizza-Tejas, LLC, et al., No. 22-CV-01622 (D. Minn.), based on similar allegations.  Based on the existence of these prior two actions, and the presence of the out-of-state plaintiffs’ claims, Ayvaz and its owner moved to dismiss based on lack of personal jurisdiction (both general and specific), lack of supplemental jurisdiction, and the first-to-file doctrine.  Judge Yoon’s decision followed.

The Court’s Ruling

In general, Judge Yoon’s decision was split into four discrete parts — each addressing whether the Court could exercise various forms of jurisdiction over Ayvaz and its owner.  For the most part, the Court declined each type of jurisdiction.

General Personal Jurisdiction & Out-Of-State Plaintiffs

First, although it was uncontested that Ayvaz was neither incorporated in nor headquartered out of Virginia, Plaintiffs argued that Ayvaz was subject to general personal jurisdiction in Virginia based on the U.S. Supreme Court’s decision in Mallory v. Norfolk Southern Railway Co., 600 U.S. 122 (2023).  In Mallory, the U.S. Supreme Court held that Due Process does not prohibit “a State from requiring an out-of-state corporation to consent to personal jurisdiction to do business there.”  Id. at 127.  Like the Pennsylvania statute at issue in Mallory, Virginia also has “an out-of-state business registration statute.”  Shamburg¸ 2025 WL 2431652, at *5.

Judge Yoon, however, reasoned that “unlike Pennsylvania, Virginia law does not require the out-of-state business to condition its registration on submitting to general personal jurisdiction” consistent with the decisions of several other district courts.  Id.  Thus, the Court “conclude[d] that, absent explicit consent to jurisdiction in Virginia’s business registration statute” it could not exercise general personal jurisdiction over Ayvaz or its owner.

Specific Jurisdiction & Out-Of-State Plaintiffs

Second, the Court addressed the out-of-state plaintiffs’ argument that the Court could exercise specific personal jurisdiction over Ayvaz as to the out-of-state plaintiffs but disagreed.  Judge Yoon weighed in on the pending circuit split regarding the applicability of Bristol-Myers Squibb v. Superior Court, 582 U.S. 255 (2017), to FLSA collective actions.  The Third, Sixth, Seventh, Eighth and Ninth Circuits hold that Bristol-Myers applies, whereas the First Circuit stands alone and holds otherwise.

Judge Yoon agreed with “the approach taken by the majority of the Courts of Appeals” and held each plaintiff “must present independent, sufficient bases for the exercise of the court’s specific jurisdiction over that claim.”  Id. at *6.  Similarly, because none of the plaintiffs alleged facts related to the owner’s minimum contacts with Virginia “beyond the fact that Ayvaz is registered to do business in Virginia and operates an unidentified number of Pizza Hut Franchise Stores,” their claims could not proceed against him either.

The Seventeen State Law Counts

Third, having dismissed the out-of-state plaintiffs’ claims, Judge Yoon declined to exercise supplemental jurisdiction over the seventeen state law counts. The Court observed that “the presence of more subclasses (eight) than states (seven) provides evidence of both complexity and the lack of commonality” that show that the state law claims “would substantially predominate over the FLSA claim.”  Id. at *8.  The court dismissed those claims without prejudice, leaving only the FLSA claims brought by Virginia-based employees.

The First-To-File Doctrine

Fourth and finally, the Court declined Ayvaz’s request to dismiss the case under the “first-to-file” doctrine due to the existence of the earlier filed suits in Garza and Stotesbury.  The first-to-file rule allows a federal court to decline jurisdiction when a substantially similar lawsuit involving the same parties and issues is already pending in another court.  Id. at *10.  But, the court concluded that the “putative classes and respective issues” in the two prior suits differ enough that the first-to-file rule should not be applied.  Id. at *12.

Indeed, “Stotesbery, by design, includes an FLSA claim limited to those who work in Minnesota” and thus did not overlap based on the Court’s ruling.  Id.  And, the Court declined to apply the first-to-file doctrine to Garza because the “case was settled and dismissed with prejudice” and thus was not pending at the time of the decision.  Id. at *10.   “Accordingly, Plaintiffs’ complaint will survive the motion to dismiss with respect to the FLSA claim for Plaintiffs who live in or work in Virginia.”  Id. at *12.

Implications for Employers

The Shamburg decision demonstrates that courts are increasingly unwilling to allow out-of-state employees to anchor nationwide collective actions against employers without first affording employers certain due process protections.  This growing trend prevents employers from having to defend these actions in distant and unfamiliar courts, and forces plaintiffs to bring these actions where these employers are incorporated or headquartered.

With these trends in mind, corporate counsel should continue to monitor this blog for developments because the Bristol-Myers circuit split is sure to be decided by the U.S. Supreme Court soon, and if their companies are sued in putative class and collective actions, it is better to prepared in advance for when these important issues are decided.

By Gerald L. Maatman, Jr., Anna Sheridan, and Rebecca S. Bjork

Duane Morris Takeaways: On July 3, 2025, the Maryland Supreme Court held in Martinez v. Amazon.com, Serv., No. Misc. 17 (Md. July 3, 2025), that the long-standing common law doctrine de minimis curat lex applies to both the Maryland Wage & Hour Law (MWHL) and the Maryland Wage Payment and Collection Law (MWPCL).  The Supreme Court aligned Maryland with federal precedent, reinforcing the principle that employers are not required to compensate employees for truly trivial amounts of uncompensated work time – what the U.S. Supreme Court has called “split second absurdities.”  This ruling marks a notable win for employers in Maryland, who now have a potential defense against claims for brief unpaid time.  For the defendant, the litigation will return to U.S. District Court for the District of Maryland – which had certified the question to the Maryland Supreme Court – for factual analysis on whether the time claimed by employees waiting in line to pass through security screening was truly de minimis.

Case Background

On December 2, 2021, Plaintiff Estefany Martinez brought a putative class and collective action in the U.S. District Court for the District of Maryland on behalf of current and former Amazon employees at its Baltimore fulfillment center.  Id. at 2, 6. The Complaint alleged that Amazon failed to compensate employees for post-shift time spent in mandatory security screenings, which allegedly took between 3 and 15 minutes per shift.  Id. at 5.

Martinez brought claims under the Fair Labor Standards Act (FLSA), MWHL, and MWPCL, seeking to recover unpaid wages and associated damages. On November 18, 2024, the District Court certified to the Maryland Supreme Court the following question: Does the doctrine of de minimis non curat lex, as described in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946), and Sandifer v. U.S. Steel Corp., 571 U.S. 220 (2014), apply to claims brought under the Maryland Wage Payment and Collection Law and the Maryland Wage and Hour Law?  Martinez v. Amazon.com Servs. LLC, No. 22-CV- 00502, 2024 WL 4817214, at *33 (D. Md. Nov. 18, 2024).

The Supreme Court of Maryland’s Ruling

On July 3, 2025, in a 5-2 opinion, the Supreme Court of Maryland held that the de minimis doctrine does apply to Maryland wage laws. Martinez. Slip op. at 2.  The Supreme Court reasoned that Maryland wage laws are silent on the issue but were modeled on the FLSA, which has long been interpreted to permit employers to disregard “split-second absurdities” – short, administratively burdensome periods of unpaid time. See Anderson, 328 U.S. at 692.

The Supreme Court emphasized that Maryland’s General Assembly did not express any intent to abrogate the common law rule that the law does not concern itself with trifles. It reasoned that had the General Assembly intended to prohibit a de minimis exception, it would have said so. Martinez, Slip op. at 17-19. It further observed that Maryland’s regulatory definitions of compensable time, as reflected in COMAR 09.12.41.10, are consistent with federal standards and do not contradict the de minimis doctrine.

In support, the Supreme Court relied on Anderson v. Mt. Clemens Pottery Co., where the U.S. Supreme Court held that employees must be paid for all time spent working, including pre-shift activities integral to their principal duties. However, Anderson recognized that courts need not impose liability for “negligible time,” noting that “it is only when an employee is required to give up a substantial measure of his time and effort that compensable working time is involved.” Anderson, at 692. After Anderson, the FLSA was not amended regarding the de minimis doctrine, rather it was determined that it was included in the statute all along.

Anderson also recognized the impracticality of recording every minute of work-related activity. It is from this recognition that the de minimis doctrine in wage law was born and later codified and clarified by the Portal-to-Portal Act of 1947.

The Supreme Court of Maryland also cited Sandifer v. U.S. Steel Corp., 571 U.S. 220, 229 (2014) (Martinez, Slip op. at 15), in which the U.S. Supreme Court reiterated that even under the FLSA, employers are not obligated to compensate for time that is too fleeting or difficult to track with precision. Maryland case law authorities have described the MWHL as the State “equivalent,” “parallel,” “partner,” and “counterpart” of the FLSA (id. at 23), and the MWHL mirrors many of the FLSA features, definitions, and exemptions and has remained “substantially similar” to the FLSA since the 1960s. Id. at 24-25.  The Supreme Court emphasized that when the General Assembly enacted the Maryland wage laws, it did so against the backdrop of Anderson, Sandifer, and the Portal-to Portal Act, thereby implicitly adopting their contours unless stated otherwise.

Implications for Employers

While the Martinez decision provides employers some breathing room regarding irregular, brief, and administratively difficult to track periods of unpaid time, it does not offer a blanket exemption. Whether a given period of unpaid time qualifies as de minimis remains a highly fact-specific question. In future litigations, plaintiffs must now show that the time they allegedly were not paid for is more than “trifling.” We will follow the proceedings in the U.S. District Court in the Martinez case and keep our readers apprised of developments. 

By Gerald L. Maatman, Jr., Rebecca S. Bjork, and Betty Luu

Duane Morris Takeaways: On July 1, 2025, the U.S. Court of Appeals for the Ninth Circuit issued a decision in a case with major ramifications for employers facing wage and hour claims under the Fair Labor Standards Act.  In Harrington v. Cracker Barrel Old Country Store, Inc., Nos. 23-15650, 24-1979 (9th Cir. July 1, 2025), a unanimous panel joined three other Circuits and held that the U.S. Supreme Court’s Decision in Bristol-Myers Squibb Co. v. Superior Court of Cal., 582 U.S. 255 (2017), applies to actions under the FLSA brought in federal court.  This means that to achieve nationwide issuance of notice of a collective action under Section 216(b), each opt-in plaintiff must show a sufficient connection to the forum state. The impact will likely be fewer nationwide collective actions, which ultimately may reduce litigation pressure on employers who operate in states within the Ninth Circuit. 

Background

Plaintiffs, former and current employes of Cracker Barrel, filed a class action lawsuit in the U.S. District Court for the District of Arizona against Cracker Barrel alleging violations of the Fair Labor and Standards Act (“FLSA”).  Id. at 7.  Plaintiffs moved for court authorization to send notice of a collective action under the FLSA to “all servers who worked for Cracker Barrel in states where it attempts to take a tip credit . . . over the last three years.”  Id. at 7.  Cracker Barrel objected on various grounds, including that the district court did not have personal jurisdiction over any of its employees outside of Arizona.  Id. at 7.  The district court granted the plaintiffs’ motion and ordered the issuance of nationwide notice because “the participation of one Arizona-based plaintiff was all that was needed to secure personal jurisdiction over Cracker Barrel for the collective action.”  Id. at 7.  Cracker Barrel appealed the district court’s decision to the Ninth Circuit.

The Ninth Circuit Joins The Third, Sixth and Eighth In Requiring Non-Resident Plaintiffs In FLSA Collective Actions To Establish Specific Personal Jurisdiction

The three-judge panel in Harrington unanimously held that where the basis for personal jurisdiction in an FLSA collective action is specific personal jurisdiction, the district court must assess whether each opt-in plaintiff’s claim bears a sufficient connection to the defendant’s activities in the forum state.  In the case before them, they concluded that the district court authorized nationwide notice on the mistaken assumption that it would not need to assess specific personal jurisdiction on a claim-by-claim basis.  As a result, it vacated and remanded for further proceedings. 

In so doing, the Ninth Circuit held that the Supreme Court’s requirement outlined in Bristol-Myers — that non-resident plaintiffs in a mass tort action must establish their own basis for personal jurisdiction — applies in FLSA collective actions. 

It therefore adopted the view of three other Circuits (the Third, Sixth, and Eighth) that non-resident plaintiffs must establish their own basis for specific personal jurisdiction in the context of an FLSA collective action.  Thus, within the Ninth Circuit, a district court now must determine whether each opt-in plaintiff’s claim bears a sufficient connection to the defendant’s activities in the forum state. 

Implications Of The Decision

Harrington v. Cracker Barrel means that in states encompassed within the Ninth Circuit, employers facing wage and hour collective actions will be far less likely to need to worry about the possibility of multi-state or nationwide issuance of notice under Section 216(b) of the FLSA.  

This decision has enormously important implications for such employers.  If nothing else, the vast geographic territory and population encompassed by the jurisdiction of the Ninth Circuit means that employers now have a powerful pre-certification defense argument to deploy to defend against putative nationwide collective actions, which tend to arise where large populations of potential opt-in plaintiffs are employed.  We will follow the case on remand and keep our blog readers apprised as to how plaintiffs’ counsel proceeds in the district court. 

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Gregory Tsonis

Duane Morris Takeaways: Complex wage & hour litigation has long been a focus of the plaintiffs’ class action bar. The relatively low standard by which plaintiffs can achieve conditional certification under the Fair Labor Standards Act (FLSA), often paired with state law wage & hour class claims, offers a potent combination by which plaintiffs can pursue myriad employment claims. To that end, the class action team at Duane Morris is pleased to present the second edition of the Wage & Hour Class And Collective Action Review – 2025. This new publication analyzes the key wage & hour-related rulings and developments in 2024 and the significant legal decisions and trends impacting wage & hour class and collective action litigation for 2025. We hope that companies and employers will benefit from this resource and that it will assist them with their compliance with these evolving laws and standards.

Click here to download a copy of the Wage & Hour Class And Collective Action Review – 2025 eBook.

Stay tuned for more wage & hour class and collective action analysis coming soon on our weekly podcast, the Class Action Weekly Wire.

By Gerald L. Maatman, Jr. and Jennifer A. Riley, 

Duane Morris Takeaways: In Restaurant Law Center et al v. U.S. Department of Labor, No. 23-50562, 2024 WL 3911308 (5th Cir. Aug. 23, 2024), the Fifth Circuit reversed a decision of Judge Robert L. Pitman of the U.S. District Court for the Western District of Texas that had upheld the U.S. Department of Labor’s final rule that stated that an employer could only take a “tip credit” against the federal minimum wage for work performed by a tipped employee that was part of the employee’s tipped occupation. The Fifth Circuit held that, pursuant to the U.S. Supreme Court’s holding in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244, 2273 (2024) (which the Fifth Circuit expressly noted was rendered after Judge Pitman’s trial court decision), it was not required to defer to the DOL’s interpretation of the Federal Labor Standards Act. Accordingly, it found the Final Rule contrary to the express language of the FLSA, and that it should be vacated because it was arbitrary and capricious.

This case previews the likely new federal circuit court regime regarding agency interpretations of ambiguous statutes post-Loper Bright. The ruling is also a required read for all hospitality industry organizations.

Case Background

The Fair Labor Standards Act (“FLSA”) permits employers to take a “tip credit” when paying the wages of any “tipped employee,” such that employers may pay tipped employees $2.13 per hour “under the theory that a large portion of such employees’ total earnings comes from tips.” Id. at *2. If the difference between the $2.13 wage and the general minimum wage of $7.25 per hour is not paid by tips, the FLSA requires the employer to pay the remainder to ensure that the tipped employee makes at least $7.25 an hour. Id.

The DOL is permitted to promulgate rules interpreting and clarifying the FLSA, and issued an 80/20 guidance concerning the tip credit in its sub-regulatory Field Operations Handbook in 1988. Id. at *3. The 80/20 guidance provided that an employer was permitted to take a full tip credit for employees that provided both tipped and non-tipped work, so long as the employee’s non-tipped work did not constitute more than 20% of that employee’s work. Id.

In 2021, the DOL issued a “Final Rule” concerning the 80/20 guidance, which mandated that “[a]n employer may only take a tip credit for work performed by a tipped employee that is part of the employee’s tipped occupation.” Id. at *4 (citing 29 C.F.R. §531.56(f) (2021)). Notably, the term “tipped occupation” is not defined in the FLSA. Id. However, the Final Rule demarcated three categories of work, including: (a) directly tip-producing work (e.g., a server); (b) directly supporting work (e.g., bussing tables); and (c) work not part of the tipped occupation (e.g., preparing food). Id. The Final Rule stated that an employer could take the tip credit for “tip-producing work,” but that if more than 20 percent of an employee’s workweek is spent on “directly supporting work,” then the employer cannot claim the tip credit for the excess. Id. Moreover, the Tip Credit stated that any “directly supporting work” could not be performed for more than 30 minutes at a time. Id.

Thereafter, in December 2021, the Restaurant Law Center and the Texas Restaurant Association (collectively, the “Associations”) filed suit against the DOL, seeking to permanently enjoin the DOL’s enforcement of the Final Rule, and moved for a preliminary injunction. Id. at 5. The district court denied the preliminary injunction, and the Associations appealed to the Fifth Circuit. Id.

The Fifth Circuit’s Decision

The Fifth Circuit held that the DOL’s 2021 Final Rule was contrary to the FLSA’s text, was arbitrary and capricious, and should be vacated. Id. at *2.

In so holding, the Fifth Circuit first focused on the impact of the U.S. Supreme Court’s recent holding in Loper Bright. Prior to Loper Bright, “[u]nder Chevron, a court reviewing agency action for compliance with [a] relevant statute had to defer to ‘permissible’ agency interpretations, ‘even if not the reading the court would have reached if the question initially had arisen in a judicial proceeding.’” Id. (citing Loper Bright, 144 S. C.t at 2264).

However, post-Loper Bright, the Fifth Circuit noted that it was required “to return to the APA’s basic textual command: independently interpret [an ambiguous] statute and effectuate the will of Congress” and “use every tool at [its] disposal to determine the best reading of the statute and resolve the ambiguity.”” Id. (citing Loper Bright, 144 S. Ct. at 2263, 2266). And, since the Supreme Court’s holding in Loper Bright came out after the district court’s holding, the Fifth Circuit reasoned that it was required “to depart from the district court’s analysis at the very start.”  Id. at *10.

As such, the Fifth Circuit’s analysis started with the express text of the FLSA, which states that a “tipped employee” means “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.” Id. at *11 (citing 29 U.S.C. § 203(t)). Importantly, the FLSA does not define the terms “engaged in” or “occupation.” Id. Since the terms were not expressly defined, the “ordinary meaning of these terms in 1966, when the tip credit was added to the FLSA, controls.” Id.

After reviewing the “contemporary dictionary definitions” of the words “engaged” and “occupation,” the Fifth Circuit found that the phrase “‘engaged in an occupation’ most naturally indicate[d] a focus ‘on the field of work and the job as a whole,’ rather than specific tasks.” Id. at *11-13. Importantly, the Fifth Circuit noted that “[t]he FLSA does not ask whether duties composing [a] given occupation are themselves each individually tip-producing.” Id. at *14. Accordingly, the Fifth Circuit held that “the Final Rule applies the tip credit in a manner inconsistent with the FLSA’s text.” Id.

Finally, the Fifth Circuit noted that the plain language of the FLSA “asked only whether the employee is engaged in an occupation in which he receives tips.” Id. at *20. As such, the Fifth Circuit determined that the Final Rule “replace[d] the Congressionally chosen touchstone of the tip-credit analysis — the occupation — with one of the DOL’s making — the timesheet.” Id. For these reasons, the Fifth Circuit concluded that the Final Rule was arbitrary and capricious. Id. at 821.

Implications For Employers

This decision has wide-ranging implications. The Fifth Circuit’s ruling in Restaurant Law Center sets aside 36 years of precedent upholding the 80/20 standard contained in the Final Rule. It arms employers with additional ammunition to fight wage & hour class and collective actions brought by private plaintiffs who have relied on the DOL’s Final Rule to position their lawsuits. It also previews what could be the new federal circuit court regime regarding agency interpretations of ambiguous statutes post-Loper Bright. As the Fifth Circuit stated, Congressional intent controls, and “while longstanding agency practice might have the power to persuade, it has never had the power to control.” Id. at *16 (citing Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)).

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Derek S. Franklin

Duane Morris Takeaways: On August 21, 2024, Judge William C. Griesbach of the U.S. District Court for the Eastern District of Wisconsin joined in the fray over whether the long-used two-step process for issuing notice of a Fair Labor Standards Act (“FLSA”) collective action is consistent with the text of the statute.  In Laverenz v. Pioneer Metal Finishing, LLC, No. 1:22-CV-00692 (E.D. Wis. Aug. 21, 2024), Judge Griesbach held that it is not.  He ruled that in actions brought under the FLSA, plaintiffs must show by a preponderance of evidence that they are “similarly situated” to other individuals allegedly subject to the same violations of the statute in order to secure certification of a collective action.  The decision in Laverenz reflects potential growing momentum among district courts toward rejecting a two-step “conditional certification” approach in favor of “one-step” standard placing the “similarly situated” burden in Plaintiff’s court at all relevant times.  The ruling should be required reading for all businesses defending wage & hour litigation in the states comprising the Seventh Circuit.

Case Background

Plaintiff Amanda Laverenz filed a class and collective action lawsuit under the FLSA and Wisconsin state law alleging that Defendant Pioneer Metal Finishing, LLC (“Pioneer”) deprived her and other similarly situated hourly employees of wages through its practice of rounding employees’ time clock entries to the nearest quarter hour and paying employees based on that rounded time.  Id. at 2.  In connection with her proposed FLSA collective action, Plaintiff filed a motion with the Court seeking conditional certification of a collective of employees whom she claimed Pioneer subjected to the same rounding practice.  Id. at 3.

As is typical, Plaintiff argued that her lawsuit should proceed immediately as a collective action by issuance of an order sending notice to include hourly-paid employees at seven of Pioneer’s divisions around the country who she claimed were similarly situated.  Id.  She maintained that the Court should employ a lenient two-step certification process established in 1987 by a Third Circuit district court in Lusardi v. Xerox Corp.   Id.

Under the Lusardi framework, named plaintiffs need only present what courts have described as a “modest factual showing” that similar potential plaintiffs exist to satisfy the first step, i.e., certification of a collective action on a conditional basis.  In the second step, assuming others have joined the lawsuit as opt-in plaintiffs and the parties have completed discovery on the merits, the court would then make a final determination whether the opt-in plaintiffs actually qualify as parties to the litigation on the basis of substantial similarity to the named plaintiffs in what is known as a second-stage final certification order.  Plaintiff claimed that she offered sufficient evidence of similarity and a violation of law to satisfy that standard at the conditional certification stage.  Id.

Pioneer responded that the Court should follow the Fifth Circuit’s 2021 decision in Swales v. KLLM Transp. Servs., LLC, which rejected the longstanding approach developed in Lusardi.  985 F.4th 430 (5th Cir. 2021). Pioneer argued that the two-step approach “is inconsistent with the FLSA’s purpose and Seventh Circuit case law stressing the similarities of FLSA certification to Rule 23 class certification, which requires ‘rigorous’ scrutiny.”  Id. at 3.

The Court’s Decision

Judge Griesbach sided with Pioneer.  He adopted the Fifth Circuit’s FLSA collective certification approach in Swales and denied Plaintiff’s motion for conditional certification on August 21, 2024.

Citing a 2022 Annual Class Action Report that Gerald L. Maatman, Jr., for which this post’s co-author served as General Editor, Judge Griesbach noted that federal courts in 2021 granted FLSA conditional certification motions in 81% of rulings on such motions during the first stage of the two-step process despite – in that same year – granting 53% of FLSA decertification motions at the next stage.  The Court gleaned from that data that “over half of those conditionally certified putative classes failed to survive upon a more rigorous review” and concluded, as a result, that the two-step certification process “defeats the very goal it set out to accomplish — efficiency.”  Id.

The Court’s adoption of the Swales framework in Laverenz required it to assess following factors to determine whether Plaintiff sufficiently proved similarly between she and proposed opt-in plaintiffs: “(1) the disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to the defendant which appear to be individual to each plaintiff; and (3) fairness and procedural considerations.”  Id. at 15-16.

As to the first factor, the Court noted that “significant factual differences exist regarding how the [time rounding] policy affected each employee” given that “[t]he rounding benefitted some and negatively affected others.”  Id. at 1.  As to the second factor, the Court found that too many individualized claims remained in the matter that would necessarily involve fact-specific inquiries.  Id. at 20.  As to the final factor, the Court explained that “it would seem particularly inefficient and unfair to notify a broad class of employees,” given its conclusion that Plaintiff’s proposed collective action claims “involve highly individualized inquiries and defenses.”  Id.  Toward that end, the Court determined that “[a]uthorizing notice in a case such as this would turn a tool into a sword,” and that “[m]any a plaintiff would likely join the line, requiring Pioneer to defend dozens — possibly hundreds — more claims despite the fact that Laverenz has not even showed a violation of law.”  Id.  at 20.

Ultimately, the Court concluded that Plaintiff “failed to provide a sufficient basis for the court to facilitate notice to potential plaintiffs,” and denied Plaintiff’s motion for conditional certification.  Id. at 20.

Implications For Employers

Our annual class action review analyzed FLSA conditional certification rates, and, in 2023, plaintiffs won 75% of first stage conditional certification motions.  However, only 56% of those conditionally certified collective actions survived motions for decertification involving a more rigorous scrutiny.  Our previous post on these statistics is here.  Hence, the stakes are quite meaningful in terms of the approach outlined in the Laverenz ruling.

As any employer who has been sued by a named plaintiff seeking to represent an FLSA collective action knows, the discovery burden imposed by application of the two-step Lusardi standard is far more onerous than what Judge Griesbach established in this case.  Full merits discovery lasting more than a year is common, as opposed to a narrowly-targeted investigation of the work performed by the plaintiffs along with facts relating to the relevant independent contractor factors.  For that reason alone, employers with operations within the Seventh Circuit will be happy to know they can cite Judge Griesbach’s ruling in the future.

While no one can predict the future with any degree of certainty, it seems likely that this new legal trend regarding the collective action notice process may eventually need to be resolved by the U.S. Supreme Court.

By Gerald L. Maatman, Jr., Gregory Tsonis, and Ryan T. Garippo

Duane Morris Takeaways:  On August 16, 2024, in Luna Vanegas, et al. v. Signet Builders, Inc., No. 23-2964, 2024 WL 3841024 (7th Cir. Aug. 16, 2024), the U.S. Court of Appeals for the Seventh Circuit found that, in a Fair Labor Standards Act (“FLSA”) collective action, a district court must have personal jurisdiction over a defendant for every single one of the would-be plaintiffs’ claims.  Those plaintiffs for whom personal jurisdiction does not exist must proceed in a forum where the corporate defendant is essentially at home.  This decision is a substantial win for employers and helps prevent them from being dragged into nationwide lawsuits far away from where they do most of their business.

Case Background

Signet Builders, Inc. (“Signet”) is both incorporated and headquartered in Texas, but its business spans across the nation.  As part of its business, Signet employs a small subsect of its employees in Wisconsin who are primarily tasked with building livestock houses.  Plaintiff Jose Ageo Luna Vanegas (“Luna Vanegas”) was one of those workers.  In 2021, he sued Signet in the U.S. District Court for the Western District of Wisconsin claiming that he was not paid overtime, in violation of the FLSA.  Luna Vanegas, however, did not bring his claims on an individual-plaintiff basis, but rather sought to litigate his FLSA claims on a nationwide collective action basis in an effort to magnify the scope of the litigation.

After Luna Vanegas filed his lawsuit, a complicated legal battle unfolded.  Signet filed a motion to dismiss and argued that “Luna Vanegas’s work fell within a provision of the FLSA that exempts agricultural workers from its overtime requirements.”  Luna Vanegas v. Signet Builders, Inc., 554 F. Supp. 3d 987, 989-90 (W.D. Wis. 2021) (citing 29 U.S.C. § 213(b)(12)).  The district court held that Luna Vanegas “performed his work on farms, and the work he performed — constructing livestock containment structures — was incidental to farming,” and therefore dismissed his case.  Id. at 993.

Luna Vanegas appealed that dismissal to the Seventh Circuit. It reversed the district court — holding that dismissal was premature.  Luna Vanegas v. Signet Builders, Inc., 46 F. 4th 636, 645 (7th Cir. 2022).  The Seventh Circuit ruled that § 213(b)(12) is an affirmative defense, and Luna Vanegas’ complaint did not contain enough facts about the agricultural nature of the work to warrant dismissal.  Signet then filed a petition for writ of certiorari and asked the U.S. Supreme Court to decide the issue, which the Supreme Court declined to do.  Signet Builders, Inc. v. Luna Vanegas, 144 S. Ct. 71 (2023).

With the case back at the district court, Luna Vanegas filed a motion for conditional certification, a common strategic tactic in FLSA collective actions, and sought to send notice of the lawsuit to a nationwide group of Signet’s employees.  Luna Vanegas v. Signet Builders, Inc., No. 21-CV-00054, 2023 WL 5663259, at *1 (W.D. Wis. Sept. 1, 2023).  Even though Signet was incorporated and headquartered in Texas, the district court held that it was fair for this notice to go out to employees across the nation, because otherwise the ruling would have “the practical effect of forcing plaintiffs to file any multi-state FLSA collective action in the defendant employer’s home forum.”  Id. at *3.  Signet then filed a motion for interlocutory appeal, bringing the case back to the Seventh Circuit for a second time.  Id. at *4.  The district court granted that request.

The Seventh Circuit’s Opinion

On appeal, the Seventh Circuit reversed the district court for the second time, but this time on personal jurisdiction grounds.

The Seventh Circuit explained that generally a plaintiff can only sue a corporate defendant in three places.  First, a corporation can be sued in its state of incorporation.  Second, a corporation can be sued in the state where its headquarters is located.  And third, a corporation can be sued in any state where the issues connected with that particular case occurred.  In this case, it was undisputed that Signet was incorporated and headquartered in Texas.  It was also undisputed that only Luna Vanegas’ claims (and not the claims of other employees) arose out of Signet’s conduct in Wisconsin.  Therefore, the question was whether Signet’s conduct in Wisconsin was sufficient to justify a nationwide case.  The Seventh Circuit held that it was not.

Relying heavily on a recent U.S. Supreme Court decision in Bristol-Myers Squibb Co. v. Superior Ct. of California, San Francisco Cnty., 582 U.S. 255 (2017), the Seventh Circuit held that Signet must be subject to personal jurisdiction in Wisconsin — for each and every one of the would-be opt-in plaintiffs’ claims — for the case to go forward on a nationwide basis.  This rule differs from the standard in Rule 23 class actions because there, a representative plaintiff can maintain a lawsuit in a foreign jurisdiction as long as the court has jurisdiction over the named plaintiff.

The Seventh Circuit, however, reasoned that because a collective action plaintiff is not a party until they “opt in” to the litigation, FLSA collective actions are truly just “agglomerations of individual claims,” as opposed to one singular lawsuit.  Luna Vanegas, 2024 WL 3841024, at *4.  Further, unlike Rule 23 class actions, each party is entitled to proceed individually and “the statute of limitations on opt-in plaintiffs’ claims enjoys tolling only after the plaintiff files her consent, which goes to show the focus on a plaintiff’s own management of her claim.”  Id.  Consequently, the Seventh Circuit set a different standard to find personal jurisdiction in FLSA collective actions than the standard for Rule 23 class actions.

Additionally, the Seventh Circuit dispensed with a highly technical argument regarding Federal Rules of Civil Procedure 4 and 5 — holding that it did not save Luna Vanegas’ nationwide lawsuit.  Luna Vanegas argued that once personal jurisdiction was established over his claims against Signet in Wisconsin, and service was validly executed pursuant to Rule 4, then he was free to add parties via service under Rule 5.  However, the Seventh Circuit succinctly and unequivocally rejected that argument and held: “That is not how it works.”  Id. at *7 (emphasis added).  The Seventh Circuit explained that the Rule 5 workaround only applies if the court already has personal jurisdiction over the defendant as to the opt-in plaintiffs’ claims.  Otherwise, a new summons needs to be brought in a venue where the opt-in plaintiff can establish personal jurisdiction over the company.

Implications For Employers

Although a positive development for employers, this opinion is not a “nail in the coffin” for nationwide FLSA collective actions.  Indeed, the Seventh Circuit explicitly noted that “[a] nationwide collective of Signet’s workers could proceed in Texas, which enjoys general jurisdiction over Signet, with no loss of efficiency.”  Id. at *9.  Rather, this opinion simply states that if an employee is going to sue their employer for millions of dollars of potential liability and while asserting a nationwide collective action, they must do so in their employers’ home forum.

Corporate counsel, however, should not expect the fight to stop here.  The Seventh Circuit’s opinion is consistent with recent holdings by the Courts of Appeal in the Third, Sixth, and Eight Circuits, each imposing the same personal jurisdiction requirement.  Canaday v. Anthem Cos., 9 F.4th 392 (6th Cir. 2021); Fischer v. Fed. Express Corp., 42 F.4th 366 (3d Cir. 2022); Vallone v. CJS Sols. Grp., LLC, 9 F.4th 861 (8th Cir. 2021).  The issue is not entirely settled, however, as the First Circuit reached the opposite conclusion.  Waters v. Day & Zimmermann NPS, Inc., 23 F.4th 84, 94 (1st Cir. 2022).  Accordingly, the pending circuit split signals that this issue is ripe for consideration by the U.S. Supreme Court.