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Seventh Circuit Affirms Denial of Class Certification for Failure to Show Commonality under Dukes in Vacation Pay Suit

Last week, in McCaster et al. v. Darden Restaurants, Inc. et al., No. 15-3258 (7th Cir. Jan. 5, 2017), the Seventh Circuit relied on Wal-Mart Stores, Incv. Dukes, 564 U.S. 338 (2011) and affirmed the district court’s denial of class certification of Plaintiffs’ claims for vacation pay under state law.  The Seventh Circuit’s reliance on Dukesdemonstrates that the Supreme Court’s holding extends beyond the discrimination context and applies with equal force in wage and hour class actions (at least within the Seventh Circuit).  The Court concluded that Plaintiffs’ proposed class definition constituted an impermissible “fail safe” class because an individual’s membership in the class turned on the merits of his or her claim, and that Plaintiffs’ alternative class definition did not satisfy the commonality requirement of Rule 23 under Dukes. This decision exemplifies the critical balance plaintiffs must strike in defining their proposed classes; while a “fail safe” class will not be permitted, a class definition that is too broad will not satisfy the requirements of Rule 23.

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Plaintiffs Demiko McCaster and Jennifer Clark, who worked at two different restaurants owned by Darden Restaurants, Inc., alleged that Darden failed to pay them the accrued vacation pay allegedly owed to them upon their separation from employment in violation of the Illinois Wage Payment and Collection Act (“IWPCA”). Here, the “vacation pay” at issue was actually “anniversary payments” paid to eligible employees when they reached the annual anniversary of their hiring date.  The anniversary payments are referred to as “vacation pay” because Darden treated the anniversary payments as vacation pay for purposes of the IWPCA, and when an employee stopped working for the company, Darden would include the pro rata amount of anniversary pay in the employee’s final paycheck.

Plaintiffs sought to bring claims on behalf of themselves and “[a]ll persons separated from employment with [Darden] in Illinois between December 11, 2003, and the conclusion of this action[] who were subject to Darden’s Vacation Policy . . . and who did not receive all earned vacation pay benefits.” The Seventh Circuit agreed with the district court that this definition described an improper “fail safe” class because membership in the class was dependent on whether an individual had a valid claim.

In an attempt to address the district court’s concerns with the “fail safe” class, Plaintiffs proposed an alternative definition, which omitted the phrase “who did not receive all earned vacation pay benefits.” By way of their alternate class definition, Plaintiffs sought to bring claims on behalf of “[a]ll persons separated from employment with [Darden] in Illinois between December 11, 2003, and the conclusion of this action[].”  The Seventh Circuit concluded that Plaintiffs did not satisfy the fundamental commonality requirement of Rule 23(a) because the alternate class consisted of all employees who separated from employment with Darden during a specific time period but Plaintiffs did not identify any unlawful conduct by Darden that covered the entire putative class and that caused putative class members to suffer the same injury.

The Court explained that Plaintiffs had not “pointed to any unlawful practice or act common to the class” and did not, for example, argue that Darden’s vacation-pay policy violated the IWPCA on its face. Rather, Plaintiffs simply claimed that some former employees did not receive all of the vacation pay they were allegedly due under the vacation policy without proffering any common proof that could establish liability on a class-wide basis.  Accordingly, the Seventh Circuit concluded that the case “raise[d] only an amalgam of individual IWPCA pay claims by McCaster, Clark, and other separated employees . . . that may (or may not) be valid based on the employee’s particular circumstances” and assessing the merits of the claims would depend “entirely on each employee’s individual work history [with Darden] and the specific payroll practices of the managers of the restaurants where they worked.”

The Court acknowledged that Plaintiffs had offered one question that was technically “common” to the putative class – whether Darden’s vacation pay policy is a length of service policy subject to the pro rata requirement of the IWPCA. The Court found that this question did not advance Plaintiffs’ argument in support of class certification. It was undisputed that Darden treated the vacation pay as subject to the IWPCA’s pro rata requirement and therefore the answer to that “common” question did not satisfy the commonality requirement of Rule 23 under Dukes because it did not resolve “an issue that is central to the validity of each one of the claims in one stroke.”

© 2019 Proskauer Rose LLP.

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About this Author

Mark W Batten, Labor & Employment Attorney, Proskauer Law Firm
Partner

Mark Batten is a Partner in the Labor & Employment Law Department and co-head of the Class/Collective Action Group, resident in the Boston office.

Mark represents employers nationwide at all stages of complex employment litigation, including class and collective actions on wage and hour matters and discrimination claims. Ranked by Chambers USA, Mark is hailed as “a fabulous lawyer, handling interesting and complex cases.” Clients “highly recommend him to anyone seeking litigation counsel in the Boston area,” as well as note “he is...

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Elise Bloom, Labor Employment Attorney, Wage, Hour, Class Action, Proskauer
Partner

Elise M. Bloom is a member of Proskauer’s Executive Committee, co-head of the Class/Collective Actions Group and former co-chair of the Labor & Employment Law Department. During her tenure as co-chair, the department was named one of the top three U.S. labor and employment practices by The American Lawyer, ranked by Chambers Global2014 as Band 1 in the U.S. and by Chambers USA 2014 as Band 1 Nationwide, and recipient of the Chambers USA 2012 Award for Excellence.

Elise is recognized as one of the leading employment lawyers and was named “Best in Labor & Employment” at Euromoney’s 2014 Americas Women in Business Law Awards. Elise is also widely considered to be one of the most creative and effective Wage & Hour Collective Action defense lawyers in the U.S., as demonstrated by the fact that she was recently named as one of the top five Class Action “Most Valuable” lawyers by Employment Law360. Elise defends employers against individual and class actions brought under federal and state anti-discrimination laws as well as against collective and class action claims alleging wage and hour violations under federal and state law.  

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Noa M Baddish, Labor and Employment Attorney, Proskauer Law Firm
Associate

Noa M. Baddish is an Associate in the Labor & Employment Department, resident in the New York office. She is a member of the Employment Litigation & Arbitration, Class and Collective, Employment Law Counseling & Training, and Whistleblower & Retaliation Groups.

212-969-3630