Chipotle managers may be able to bring collective action under FLSA

The Court of Appeals in this case says the plaintiffs may bring a collective action against their employer for violations under the Fair Labor Standards Act, but they cannot bring a class action. The Court uses this case to clarify the rules for certain collective actions.

The case is Scott v. Chipotle Mexican Grill, LLC, issued on April 1, one of the rare cases decided more than one year after oral argument. Defendant is a Mexican restaurant chain with more than 2,000 restaurants. Plaintiffs claim the restaurant misclassified them as managerial employees, which means they cannot recover overtime pay. Since we got a lot of potential class members (known within the restaurant as "apprentices") an incorrect classification means this would be a profitable case for them and their attorneys.

To maintain a class action, the potential class members must show their claims are sufficiently numerous, have legal issues in common, their claims are typical, and the class members will adequately represent the class as a whole. The district court decertified the class, reasoning that the common factual and legal questions raised by the case were outweighed by individualized questions surrounding each plaintiff's primary duties. Plaintiffs claimed their primary duties were managerial in nature. The predominance requirement for class actions is met "if resolution of some of the legal or factual questions that qualify each class member's case as a genuine controversy can be achieved through generalized proof, and if these particular issues are more substantial than the issues subject only to individualized proof." This is the predominance inquiry.

The problem for the class plaintiffs, the Second Circuit (Chin, Sullivan and Parker) holds, is that, while the range of managerial tasks (such as employment decisions, scheduling, inventory, and performance evaluations) and the range of manual labor tasks (such as working the line, serving customers, etc.) are similar, the primary duty performed by the class plaintiffs are not sufficiently similar. For example, while some apprentices prepared and disbursed scheduled without approval from higher management, others did not perform this managerial task because they did not believe they had authority to do so. In other words, despite some common questions of fact surrounding their job duties, "the disparate accounts from Apprentices proved fatal to the predominance inquiry."

But the plaintiffs do convince the Second Circuit that the district court got it wrong in denying their right to bring a collective action, which is a concept unique to the Fair Labor Standards Act, allowing "similarly situated" employees to band together for a suit. This is different from a class action. The Second Circuit uses this case to clarify what it means to be similarly situated under the FLSA, noting that the Ninth Circuit said in 2018 that to be similarly situated, the "named plaintiffs and opt-in plaintiffs are alike with regard to some material aspect of their litigation," such as a similar issue of fact or law relevant to disposition of their FLSA claims. "It follows that if named plaintiffs and party plaintiffs share legal or factual similarities material to the disposition of their claims, dissimilarities in other respects should not defeat collective treatment." This is new law in the Second Circuit.

But there is more to the collective action analysis. Under "step two" of this so-called "ad hoc" framework, courts have considered the disparate factual and employment settings of the individual plaintiffs, defenses to the case that might be individual to each plaintiff, and fairness and procedural considerations counseling for or against collective action treatment. Some courts even use the "sliding scale" approach, which conflates certain class action principles with the certification rules. The Second Circuit rejects these approaches and holds that the requirements for certifying a class action under FRCP 23 are unrelated to and more stringent to the requirements for similarly situated employees who bring a collective action under the FLSA. Since the district court rejected the collective action under the "ad hoc" approach, that was improper. The case returns to the district court to resolve that issue under the analysis in this appellate ruling.