Driver et al v. Appleillinois, LLC

Filing 334

MEMORANDUM Opinion and Order. Signed by the Honorable Geraldine Soat Brown on 3/2/2012. Notice mailed by judge's staff (ntf, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
GLENN DRIVER, DEMIKO D.
MCCASTER, ROSAMAR MALLARI,
JOYCE A. BRITTON, and MICHAEL
H. HICKS, on behalf of themselves and
all others similarly situated, known and
unknown,
Plaintiffs,
v.
APPLEILLINOIS, LLC d/b/a
APPLEBEE’S NEIGHBORHOOD
GRILL & BAR, et al,
Defendants.

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Case No. 06 C 6149
Magistrate Judge Geraldine Soat Brown

MEMORANDUM OPINION AND ORDER
Plaintiffs in this case allege that AppleIllinois, LLC and some of its members and managers
(collectively “AppleIllinois“) paid them and other tipped employees sub-minimum “tip credit” wages
while failing to comply with the requirements for taking such a credit under the Illinois Minimum
Wage Law (IMWL), 820 Ill. Comp. Stat. 105/1, et seq., and the Fair Labor Standards Act (FLSA),
29 U.S.C. § 201 et seq. (Third Am. Compl. ¶¶ 1, 19-38, 44-55.) [Dkt 141.] Classes were certified
for three of Plaintiffs’ IMWL claims. (Mem. Op. & Order, Mar. 2, 2010 (“Certification Order”) at
2, 10, 46-47.) [Dkt 231.]1

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Plaintiffs’ motion for class certification was denied as to certain other claims.
(Certification Order at 2, 46-47.) Plaintiffs did not seek collective action certification of their FLSA
claims.
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Now, in the wake of the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, ___
U.S. ___, 131 S. Ct. 2541 (2011), AppleIllinois moves for decertification of one of the certified
classes: the “dual jobs” class consisting of “persons employed by Defendant AppleIllinois, LLC,
from October 6, 2003, to the conclusion of this action, who worked as tipped employees earning a
sub-minimum, tip credit wage rate, and who performed duties unrelated to their tipped occupation
for which they were not paid at the minimum wage rate.” (Defs.’ Mot. Decertify ¶¶ 2-4 [dkt 290];
Defs.’ Mem. in Supp. of Mot. Decertify (“Defs.’ Mem.”) at 1 [dkt 291].) Plaintiffs oppose the
motion. (Pls.’ Resp. Mot. Decertify.) [Dkt 311.]

BACKGROUND
The procedural history, factual background and legal framework of this case up to the
Certification Order were described in that order, and will only be discussed here as necessary.
AppleIllinois sought leave to appeal the Certification Order pursuant to Federal Rule of Civil
Procedure 23(f), but the Seventh Circuit declined to accept the appeal. (Order, Case No. 10-8012,
Apr. 16, 2010.) [Dkt 234.] In the summer of 2010, this court approved the form of notice and
directed that it be sent to the class members. [Dkt 242.] Discovery on the merits has been
completed, and Plaintiffs’ motions for summary judgment are pending. [Dkt 297, 303.]
During the time AppleIllinois’ motion to decertify has been under advisement, the Seventh
Circuit has issued a number of opinions elucidating the application of Wal-Mart. The parties were
permitted to supplement their briefing on the motion with submissions discussing Messner v.
Northshore U. HealthSystem, _____ F.3d ____, No. 10-2514, 2012 WL 129991 (7th Cir. Jan. 13,
2012), and Ross v. RBS Citizens, N.A., ____ F.3d _____, No. 10-3848, 2012 WL 251927 (7th Cir.
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Jan. 27, 2012).
The Certification Order was entered after extensive briefing and oral argument by counsel
for the parties. The only issue on the present motion is whether the Wal-Mart decision requires that
the order certifying a dual jobs claim class be vacated. For the reasons set out below, the court
concludes that it does not.

LEGAL STANDARD
The court has an ongoing obligation to “make whatever factual and legal inquiries are
necessary” to ensure that all Rule 23 requirements are met. Szabo v. Bridgeport Machs., Inc., 249
F.3d 672, 676 (7th Cir. 2001). Rule 23 permits the court to modify a ruling concerning a previously
certified class: “An order that grants or denies class certification may be altered or amended before
final judgment.” Fed. R. Civ. P. 23(c)(1)(C). After a certification order is entered, “the judge
remains free to modify it in the light of subsequent developments in the litigation.” Gen. Tel. Co.
of SW v. Falcon, 457 U.S. 147, 160 (1982). That includes the ability to decertify a class should
circumstances so dictate. Eggleston v. Chicago Journeymen Plumbers’ Local Union No. 130, 657
F.2d 890, 896 (7th Cir. 1981). Modifications of an original class ruling, including decertifications,
typically occur in response to a significant change in circumstances, and “[i]n the absence of
materially changed or clarified circumstances . . . courts should not condone a series of rearguments
on the class issues[.]” William B. Rubenstein, Alba Conte & Herbert B. Newberg, Newberg on
Class Actions, vol. 3, § 7:47 (4th ed. 2011).

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DISCUSSION
AppleIllinois contends that the Supreme Court’s Wal-Mart decision clarified the
“commonality” requirement for class certification contained in Federal Rule of Civil Procedure
23(a), and the dual jobs class does not meet that requirement. (Defs.’ Mot. Decertify ¶ 3.) The WalMart case concerned whether Title VII claims of employment discrimination by a putative class of
1.5 million current and former female employees of Wal-Mart Stores, Inc., were properly certified
for class treatment under Rule 23(b)(2).

The Court concluded that class certification was

inappropriate because the plaintiffs had failed to show that there was a common question of law or
fact as Rule 23(a) requires, and the plaintiffs’ claims for backpay could not be properly certified
under Rule 23(b)(2). Wal-Mart, 131 S.Ct. at 2556-57, 2561. The Supreme Court specifically noted
that it did not consider whether the class could properly be certified under Rule 23(b)(3) as opposed
to 23(b)(2). Id. at 2548-49 n. 2.
This case, involving an IMWL claim certified under Rule 23(b)(3), is significantly different
from Wal-Mart. As the Seventh Circuit explained in Ross, the Title VII claims in Wal-Mart required
that the plaintiffs show proof of discriminatory motive or intent. Ross, 2012 WL 251927 at * 6. The
plaintiffs in Wal-Mart did not assert that Wal-Mart had an express corporate policy of discriminating
against women but rather that Wal-Mart’s policy of granting discretion to local managers over pay
and promotion decisions created an unlawful disparate impact on female employees. Wal-Mart, 131
S.Ct. at 2548. The plaintiffs could not show commonality because “in resolving an individual’s Title
VII claim, the crux of the inquiry is the reason for a particular employment decision.” Id. at 2252
(quotation omitted). The plaintiffs failed to demonstrate that there was “a common answer to the
crucial question why I was disfavored.” Id.
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Here, there is a common question: whether AppleIllinois required its tipped employees to
engage in duties unrelated to their tipped occupation without paying them at the minimum wage rate.
Unlike a Title VII claim, the answer to that question does not involve probing into the motive or
intent on the part of any defendant. “The plaintiffs’ IMWL claim requires no proof of individual
discriminatory intent.” Ross, 2012 WL 251927 at * 7. The answer to “why,” which is critical to a
Title VII case, is irrelevant here. The analysis is strictly objective.
In order to certify the dual jobs claim for class treatment under Rule 23(b)(3), this court was
required to analyze not only whether there are questions of law or fact common to the class under
Rule 23(a)(1), but also whether those questions of law or fact predominate over any questions
affecting only individual members. As the Certification Order reflects, before reaching that
conclusion, this court required Plaintiffs to “demonstrate that there is a common method of proof
for determining whether there is liability as to the defined class.” (Certification Order at 37.) This
court examined more than 100 declarations submitted by both sides and concluded that Plaintiffs had
submitted evidence to show a practice of using tipped employees in duties arguably unrelated to their
tipped occupations. “In fact, virtually all of the tipped employees who submitted declarations, even
those whose declarations were submitted by AppleIllinois, stated that they performed duties that it
might be argued are unrelated to their tipped occupation.” (Id.) It appeared from the evidence
presented that AppleIllinois systematically used employees compensated at the tip credit wage rate
to perform untipped tasks. The legal question of whether those tasks were “unrelated” to Plaintiffs’
tipped occupations is central to the issue of liability.
AppleIllinois argues on its current motion, as it did in resisting certification, that the dual jobs
claim will require “detailed examinations of evidence unique to each class member.” (Defs.’ Mem.
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at 12.) But that is not so if, as appears to be the case, Plaintiffs can demonstrate a practice – whether
official or unofficial – of using tipped employees in unrelated tasks without separately recording the
time and compensating them as required by the IMWL.
This case parallels the Ross case, in which the declarations supported the plaintiffs’ theory
that the defendant enforced an unofficial policy of denying employees overtime pay that was lawfully
due. Ross, 2012 WL 251927 at * 7. The fact that there were at least four (and possibly more)
different ways that the plaintiffs in Ross were required to work off-the-clock did not preclude a
determination on a class-wide basis of whether there was a policy of not paying for overtime. Id.
at * 5. Although variations among class members likely did exist, perhaps from some limited
discretion of branch managers or from the varying potential causes of the improper payment, the
class was nevertheless held together by the ultimate question of “whether an unlawful overtime
policy prevented employees from collecting lawfully earned overtime compensation.” Id. at *6-8;
see also Youngblood v. Family Dollar Stores, Inc., No. 09 Civ. 3176(RMB), 2011 WL 4597555 at
*5 (S.D.N.Y. Oct. 4, 2011) (“Where, as here, there is evidence that the duties of the job are largely
defined by comprehensive corporate procedures and policies, district courts have routinely certified
classes of employees challenging their classification as exempt, despite arguments about
‘individualized’ differences in job responsibilities.”).
Furthermore, “[t]he text of Rule 23(b)(3) itself contemplates that such individual questions
will be present. The rule requires only that those questions not predominate over the common
questions affecting the class as a whole.” Messner, 2012 WL 129991 at *8.2
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AppleIllinois points to the Supreme Court’s decision to vacate the judgment in Wang v.
Chinese Daily News, Inc., 623 F.3d 743 (9th Cir. 2010), and remand it for further consideration in
light of Wal-Mart. Chinese Daily News, Inc. v. Wang, ____ U.S. ___, 132 S.Ct. 74 (2011). (Defs.’
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AppleIllinois also argues that the assessment of damages is not amenable to class-wide proof,
citing the Supreme Court’s rejection of “Trial by Formula” in Wal-Mart. (Defs.’ Mem. at 13.) What
the Court rejected in Wal-Mart was the plaintiffs’ effort to shoehorn the individual claims for money
damages provided by Title VII into a Rule 23(b)(2) class, for which the relief is injunctive or
declaratory. Wal-Mart, 131 S.Ct at 2557-61. “[I]ndividualized monetary claims belong in Rule
23(b)(3).” Id. at 2558. Here, the dual jobs class was certified as a Rule 23(b)(3) class. “It is well
established that the presence of individualized questions regarding damages does not prevent
certification under Rule 23(b)(3).” Messner, 2012 WL 129991 at *8 (citations omitted).
The fact that this is an IMWL claim facilitates the issue of damages. Although the employees
bear the initial burden of showing that they worked hours for which they were not properly paid, it
is the employer’s duty to keep proper records. Fast v. Applebee’s Intl., Inc., 638 F.3d 872, 881-82
(8th Cir. 2011) (citing Anderson v. Mt. Clemems Pottery Co, 328 U.S. 680, 686-87 (1946)). The
undisputed evidence on the certification motion showed that all financial and sales records for
AppleIllinois restaurants were required to be maintained in a uniform electronic recordkeeping
“POS” system. (Certification Order at 4.) Accordingly, there is a centralized source of information
about the time and wage records for the class members. If Applebee’s did not maintain sufficient
records from which the employees can differentiate between time when they performed tipped duties
and time when they performed unrelated duties, the employees can use the relaxed Mt. Clemens

Suppl. Mem. re Messner at 2 n.1.) [Dkt 325.] In that case, the Ninth Circuit had affirmed a class
certification of state law overtime pay claims under Rule 23(b)(2), using as authority its own WalMart decision that the Supreme Court subsequently reversed. Chinese Daily, 632 F.3d at 754. Not
surprisingly, when the legal authority upon which Chinese Daily rested was vacated, that decision
had to be remanded for further consideration. Those circumstances do not suggest that state wageand-hour law claims may not be certified under Rule 23(b)(3).
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standard to prove their damages. See Fast, 638 F.3d at 882.3 “To place the burden on the employee
of proving damages with specificity would defeat the purpose of the FLSA where the employer’s
own actions in keeping inadequate or inaccurate records had made the best evidence of such damages
unavailable.” Brown v. Family Dollar Stores of Ind., 534 F.3d 593, 595 (7th Cir. 2008).
Finally, for the first time in this litigation, AppleIllinois suggests that the IMWL standards
might be different from the FLSA, so that the case raises “issues of first impression” under state law
not appropriate for class treatment. (Defs.’ Mem. at 8 n. 3.) AppleIllinois had previously agreed that
the same analysis applies to both statutes. (See Certification Order at 7.) Also, the Illinois
Administrative Code directs that FLSA regulations are to be used as guidance in interpreting the
IMWL. (Id. (citing Ill. Admin. Code tit. 56, pt. 210.120 (2009)). There is some irony (even
chutzpah) in AppleIllinois’ suggestion that “it is inappropriate for a federal district court to determine
these matters of first impression interpreting state law on a class basis.” (Defs.’ Mem. at 8 n. 3.)
AppleIllinois removed this case from the Illinois state court where it had been filed as a putative
class action with the same dual jobs claim. [Dkt 1.]4

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In fact, the damages calculation should be easier in this case than in Fast because this court
accepted Applebee’s argument that trying to assess whether a tipped employee’s time spent on
“related tasks” exceeded 20% would be too difficult in the class context. (Certification Order at 35.)
The court in Fast, however, agreed with the plaintiffs there that a tipped employee working over
20% of his or her time even on tasks “related” to the tipped occupation had to be compensated at the
minimum wage. Fast, 638 F.3d at 880-81.
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Moreover, in considering a whether a similar dual jobs claim could proceed as both a
collective action for the FLSA claim and Rule 23 class action for the IMWL claim, the Seventh
Circuit observed, “The plaintiffs’ claims against Outback under the IMWL and the IWPCA do not
present any complex state-law issues . . . .” Ervin v. OS Rest. Servs., Inc., 632 F.3d 971, 980 (7th
Cir. 2011). The plaintiffs, however, subsequently withdrew their motion to certify a Rule 23 class
and received permission to add opt-in FLSA plaintiffs to the state law claims. (Ervin v. OS Rest.
Servs., Inc., Case No. 08 C 1091, dkt 148, 151.)
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In sum, Plaintiffs here have submitted substantial evidence of exactly what the Supreme
Court found to be missing in Wal-Mart: standardized conduct that could render AppleIllinois liable
to the class members for the claims alleged. Plaintiffs have submitted proof that AppleIllinois
systematically used employees compensated at the tip credit wage rate to perform untipped work.
What remains is a determination as to whether this company-wide practice violated the statutory
rights of Plaintiffs and the class that they represent. In other words, the next step is to answer the
common question identified by this court on March 2, 2010; namely, whether these untipped duties
were unrelated to the tipped occupations such that they were required to be compensated at a wage
rate without a tip credit. (See Certification Order at 36.)

CONCLUSION
For the reasons set forth above, Defendants’ Motion to Decertify the Dual Jobs Class is
denied.

IT IS SO ORDERED.

_____________________________________
Geraldine Soat Brown
United States Magistrate Judge

Dated: March 2, 2012

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